SBA Loans Lend Support to Senior-Care Businesses

As of 2022, 57 million Americans (17.3 percent) were age 65 or older — a segment that is expected to represent a noteworthy 22 percent of the total United States (U.S.) population by 2040. With an aging populace, the demand for senior care continues to rise, presenting a promising opportunity for entrepreneurs to provide their communities with critical services, including adult day care, in-home health care (skilled and unskilled), in-home respite/hospice care, memory care, and funeral homes and crematoriums.

For individuals with aspirations of launching a senior-care business or expanding an existing one, U.S. Small Business Administration (SBA) loans can offer a pathway to achieving their goals, without needing significant capital to do so. These entrepreneur-friendly options can be a game-changer for those who may not be eligible to fund start-up costs (e.g., real estate, equipment, staffing, etc.) or growth initiatives (e.g., acquisition, facility upgrade, partner buy-out, etc.) through traditional financing options.

While SBA loans differ in limit and scope, their overarching goal is the same: connect entrepreneurs with the capital needed to take their business to the next level. So, what do senior-care business owners need to know about SBA loans to do just that?

SBA loans offer several benefits for current or soon-to-be senior-care business owners, including entrepreneur-friendly terms, flexible product offerings and accessible capital for growth.

Favorable terms: Compared to traditional small-business loans, SBA loans typically require lower down payments and offer longer terms (10-25 years), allowing businesses to manage their cash flow more effectively and focus on growth. This loan type can also afford an owner, depending on the SBA lender, different options in choosing an interest-rate structure aligned with the goals and financial outlook of their business.

Flexible products: The SBA offers multiple loan products catering to the requirements of the individual senior-care business owner. The SBA 7(a) loan is the most popular offering, as proceeds can be used for a wide variety of business purposes. For example, one 7(a) loan can cover the purchase of a business, new equipment and working capital. For financing fixed assets such as ground-up construction and commercial real estate, the SBA 504 loan is a common option for entrepreneurs. Both the SBA 7(a) and 504 loan products can be used for debt refinancing.

Fuels growth: In some cases, SBA loans can cover the senior-care business owner’s entire project cost, particularly for expansion endeavors. This can eliminate the need for a substantial down payment, easing financial strain and permitting the owner to focus on providing exceptional care.

What are the eligibility requirements for SBA loans?

While most business types are eligible for an SBA loan, some are not. In general, eligibility is based on what a business does to receive its income, the character of its ownership and where the business operates. At a minimum, a senior-care business should:

• Operate for profit in the U.S. or its territories.
• Have some equity available to invest.
• Meet the size requirements set by the SBA.
• Be unable to secure financing through traditional options such as commercial bank loans and lines of credit.

How can a business find an SBA lender?

It is important the owner work with a lender that will appropriately match SBA loan options with the specific needs of their senior-care business. If a large or complex loan is required, working with a national or regional financial entity may be the best option to provide the necessary funds. Smaller financial entities such as local banks and credit unions may offer more flexible terms and conditions, but they may lack the capacity or expertise to provide sizeable loan amounts.

Once the senior-care business determines which entity type may be best suited to meet its lending needs, the SBA’s searchable Lender Match tool can help identify potential lenders within proximity to the business’s location.

Want to learn how FNB partners with senior-care businesses enabling them to thrive? Check out its success stories with B&E Home Care, Senior’s 1st Choice Adult Day Care and more (by selecting “Senior Care” in the Industry filter and clicking “Apply”).