Senior housing is a fast-growing industry with great opportunities for investors. However, selecting the right financing option for your property is crucial. Getting funds for senior living projects requires a strategic plan. Luckily, there are many options available for senior living financing. Keep reading to learn about financing options for senior living.
Senior Living Financing: Securing Capital for Developers
Private Equity
Private equity can offer valuable funding for senior living businesses. In fact, there are private equity firms that focus on healthcare and senior living. They can offer significant funding in return for ownership shares in the project.
SBA 504
The SBA 504 program is an affordable option for improving and building senior housing facilities. Businesses can also use the loans for senior living acquisitions. It offers long-term, fixed-rate loans with just a 10% down payment.
SBA 7(a)
You can use SBA 7(a) loans to purchase real estate, fund construction, or renovations. It’s the SBA’s most popular loan program and is said to be the best choice for buying real estate. You can also use it for working capital, refinancing debt, or buying supplies, furniture, and fixtures.
Conventional Loans
Conventional loans from banks, credit unions, and private lenders are also worth considering when financing senior housing. However, conventional loans typically have higher interest rates than government-backed loans. They also have shorter repayment periods and stricter credit score requirements.
Fannie Mae Senior Housing Loans
The government backs Fannie Mae loans. It provides some of the best loan terms available for senior housing facilities. The program covers senior housing, assisted living, independent living and memory care communities. It is also available for some skilled nursing facilities and continuing care retirement communities.
Freddie Mac Senior Housing Loans
Freddie Mac senior housing loans offer another option for senior living businesses. They offer lower interest rates, making them an attractive choice for borrowers. Freddie Mac loans focus on acquiring and refinancing designated senior housing facilities. These include assisted living, independent living, properties with some skilled nursing units and memory care properties.
HUD-Assisted Living Financing
The U.S. Department of Housing and Urban Development (HUD) offers fixed-rate, long-term and non-recourse loans for senior housing. They can cover the costs of developing, renovating, and buying senior housing properties.
HUD’s 232 program guarantees loans for building and renovating nursing homes, board and care properties, and assisted living facilities. The 232/223(f) program is for those wanting to buy or refinance senior housing properties.
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