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How Should I Finance My Assisted Living Facility?


As the baby boomer generation gets older, the aging population of the United States, mainly people 85 years old and above, increases. With this increase, demand for facilities that will cater to the senior population also comes with it.

Since the projection for the aging population is unprecedented growth within twenty years, the senior housing industry will be a good investment. And since the projected increase in the population is still several years into the future, investing as early as now in the senior living industry may be a good idea.

Some business people and investors may see the potential of this industry. However, not all of them are well-versed with what needs to be done with an assisted living facility. Constructing and operating an assisted living facility is a specific niche in the market. That’s why investors can’t run it just like any other business endeavor.

How Should I Finance My Assisted Living Facility | Apricus 
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The Usual Financing Lenders for Assisted Living Projects

One factor that business people and investors need to consider if they want to venture into the assisted living industry is how to finance their projects. There are several options to choose from, and we’ve rounded up the usual lenders for these kinds of projects.

  • Banks

Getting a traditional bank loan to finance your assisted living facility is possible, but it may be challenging. Since most banks will only be willing to lend on a cash-flowing asset, investors may find it hard to get approved for a loan for a vacant assisted living facility. Most of the time, banks underwrite a loan based on the facility’s performance and the operator’s business plan and exit strategies.

Should you be successful in acquiring a loan from a bank, the typical option you’ll get is a recourse loan, with a twenty to twenty-five-year amortization, with a five-year maturity.

  • Federal Government

Loans acquired from the federal government are the usual way to get an assisted living project financed. There are several programs that investors can apply for, and here are some of them:

  • SBA 7A Loans
  • Section 232 Loan Program
  • USDA B&I Loans
  • SBA 504 Loans
  • Specialty Finance Companies

Specialty finance companies give loans to clients and businesses who may find it challenging to acquire financing through banks. Although the options you get are usually somewhat the same as with banks, like recourse loans with a twenty to twenty-five-year amortization and a three to five-year maturity, the rates in firms like these are typically higher. And while banks are not usually interested in cashing out, some of these firms are.

  • Tax Increment Financing (TIF)

Some municipalities allow the construction of a new assisted living project to be qualified for TIF. While the guidelines of TIF may vary depending on the municipality, the general policy is that upon entering an agreement, a municipality may give a developer a tax break in a given period. TIF can be an excellent way for assisted living facilities to save money in the long run.

The Assistance You May Need

When you’re looking for ways to finance your assisted living facility project, getting assistance may not be a bad idea. Working with a consulting firm that knows the ins and outs of the assisted living industry may expedite your financing process, ensure the approval of your financing, and save you time and money. Plus, since they have insider knowledge in the industry, they may connect you with lenders who are more open to lending to assisted living projects.

Do you still need some convincing? Here’s an article on why investing in senior housing is a good idea. 

Final Thoughts

The continuous growth in the aging population makes for an excellent market to try. The projections for the demand for assisted living facilities are reasonable since more and more seniors will need facilities to live comfortably and independently. Elders living in these facilities also give their families peace of mind through receiving proper care. Although financing an assisted living facility may be challenging, the profit potential of such a venture is undeniable. 
Do you have more questions about available financing options for your assisted living facility project? Apricus is one of the most trusted senior living consultants in the country. Call us now at 386-256-2015, so we can get you started.

1 Comment

  • Guide to Assisted Living Rules and Regulations - Apricus

    February 16, 2022 - 11:45 am

    […] to assisted living rules and regulations? Most state regulations address essential services that a senior living facility should provide. These services are daily living activities like helping with dressing, eating, […]

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