Introducing NAC’s Assisted Living and Skilled Nursing Facility Loan Program

Are you seeking capital to invest in an assisted living community, skilled nursing facility, or another type of senior care development? If so, an Assisted Living and Skilled Nursing Facility Loan from North Avenue Capital (NAC) could be the perfect financing solution. We’re one of the only lenders in the country focused exclusively on the USDA Rural Development Loan Program. Also known as the OneRD Guaranteed Loan Initiative, the program offers a multitude of USDA-backed financing options for businesses, investors, co-ops, nonprofits, and municipalities to use for a wide range of commercial uses. This includes the acquisition, construction, improvement, and refinancing of many types of elder care facilities, as well as other kinds of healthcare-related businesses and facilities, including hospitals.

While the OneRD program was created to support economic development in rural areas, many are surprised to learn how broad this definition is. The USDA defines rural as any city or town with 50,000 or fewer residents. This includes more than 97% of America’s geographic territory. If you are considering investing in an assisted living, skilled nursing, or another senior care facility, you can quickly and easily check your geographic eligibility by plugging your address into this interactive map.

Why the Long-Term Demand for Elder Care Facilities is Rising

Our nation is aging. According to an Urban Institute study of data from the U.S. Census Bureau, by 2040, almost one in five Americans will be age 65 or older, up from about one in eight in 2000. The number of Americans ages 65 and older will more than double over the next 40 years, reaching 80 million in 2040. The number of individuals ages 85 and older – the group most often needing help with basic personal care – will nearly quadruple between 2000 and 2040.

As a result, providing high-quality facility-based long-term care for this population in board and care homes, assisted living facilities, nursing homes, and continuing care retirement communities, will be paramount. These are the types of facilities where residents will be able to receive ongoing memory care, physical therapy, occupational therapy, speech-language pathology, and wound care, while living out their lives in environments that optimize their comfort, security, independence, and overall well-being.

Using USDA Business & Industry (B&I) Loans for Assisted Living and Skilled Nursing Facility Financing

Depending on whether you are a for-profit business or nonprofit entity, NAC has the right loan program to help finance your assisted living or skilled nursing facility. For for-profit businesses, we utilize USDA Business & Industry (B&I) Loans. Through this USDA lending program, NAC can provide:

• Loan amounts for assisted living communities, skilled nursing facilities, memory care facilities, physical therapy centers, hospitals, clinics, and other elder care and general healthcare facilities and offices ranging from $2 million to $25 million.
• Terms ranging from 7 to 10, 15, 30, or up to a maximum of 40 years, depending upon funding use.
• Highly competitive interest rates, which can be fixed or variable, tied to the Wall Street Journal Prime Rate +1-3%.
• Loans for:
  • Pre-existing businesses and startups
  • Individuals, partnerships, and cooperatives
  • Publicly-traded companies
  • Franchises
  • Federally-recognized Native American tribes
• Eligible uses that include:
  • New business launch
  • Business acquisition
  • Land development and new facility construction, including construction perm loans
  • Business expansion or modernization – Expand or improve your elder care facility
  • Refinancing – Replace higher interest loans that can keep your assisted living community from growing.
  • Medical equipment and supplies

Using USDA Community Facilities Loans for Senior Living Facilities Financing

For nonprofit entities and essential community facilities in qualifying areas, defined by the USDA as “a public improvement, operated on a nonprofit basis, needed for the orderly development of a rural city or town,” NAC uses USDA Community Facilities Loans.

• Loans for assisted living communities, skilled nursing facilities, memory care centers, and other elder care facilities, as well as hospitals, labs, clinics, pharmacies, doctor offices, physical therapy centers, and more.
• Loan amounts ranging from $2 million to $100 million, which includes both the guaranteed and unguaranteed portions of the loan, as well as the balance of any pre-existing Community Facility Guaranteed Loans and the new loan request.
• Terms up to 40 years, depending upon funding use.
• Interest rates (fixed or variable), tied to the Wall Street Journal Prime Rate +1-3%.
• Eligible uses of funding are similar to B&I Loans; however, the facilities must be for public use and serve the rural area where they are or will be located, have significant community support, and applicants must have the legal authority to construct, operate and maintain the proposed facilities and services and be unable to finance the projects through their own resources.

Both the USDA Business and Community Facility Loan Programs are collateral-backed lending programs for credit-worthy borrowers. In addition to good credit history, applicants must be able to provide collateral set at a discounted value consistent with sound LTV practices on a 1:1 basis to the loan amount sought. All collateral must secure the guaranteed loan.

The demand for senior housing, assisted living communities, skilled nursing, and other elder care facilities is not only driven by demographics but non-discretionary needs driven by the chronic care issues of aging. There’s no getting around the need for these types of facilities but securing commercial financing for them can come with challenges. Fortunately, the USDA and North Avenue Capital have made it easier than ever to access the capital you need for your senior living project. To apply for a loan or learn more about NAC’s Assisted Living and Skilled Nursing Facility Loans, USDA Business Loans, or USDA Community Facilities Loans, contact North Avenue Capital.