SBA loans for skilled nursing facilities

What lenders check

Each lender sets its own checklist. SBA sets the basic eligibility tests.

A lender reviewing a loan to skilled nursing facilities looks at the business's numbers and these items for the trade:

• Medicare and Medicaid certification, state inspection results and the federal star rating, which affect admissions and payer contracts
• Payer mix by Medicare, Medicaid and private pay, since short-stay Medicare residents pay more per day than long-stay Medicaid residents
• Nurse and aide staffing levels, agency staffing cost and whether the operating company and the building belong to separate entities

Common uses of the money

Businesses like these use SBA loans for:

• Buying an existing facility or its operations, with the license and certification transfer that the deal requires
• Renovating rooms, therapy gyms and nurse stations to meet current life-safety codes
• Nurse call, medication cart and electronic records systems that regulators and payers expect

Collateral

Most of the security is the building and land, valued as a going concern, while beds, lifts and kitchen equipment add little at resale.

How much they borrow

43% of these loans were $500,000 or less, the range where SBA Express is available.

The median loan was $691,250, larger than the $150,300 median for all SBA 7(a) loans. Half of the loans fell between $202,750 and $1.66 million. The most common size band was Over $2,000,000.

By business age, 47% had operated for more than 2 years and 17% for 2 years or less. 13% were startups opening with the loan, and 23% paid for a change of ownership.

How the money comes

14% of the loans went through SBA Express and 13% were lines of credit. The median term was 20 years.

Across all industries, 36% of loans went through SBA Express and 28% were lines of credit. Express counts here include Export Express.

The median term of 20 years (240 months) fits real estate. For real estate, SBA's maximum term is 25 years, plus any reasonable construction or renovation period. Source: SOP 50 10 8.1: App. 17, Para. A.3 (p. 390); 13 CFR § 120.212(c).

Where the loans are

California had the most loans, 34 of 132 (26%).

Location is the state of the business, not of the lender.

Compare every state on SBA loans by state.

How often these loans went bad

0% of 130 seasoned loans were charged off, below the 3.6% rate for all SBA 7(a) loans.

None of the 130 loans approved October 1, 2019 to September 30, 2022 were charged offcharged offThe lender wrote the loan off as a loss because it was not being repaid. by June 30, 2026. By dollars, 0% of the approved amount was charged off.

SBA size standard

NAICS 623110 has its own size standard.

For NAICS 623110, SBA's size standard is $34 million in average annual receipts. A business at or under the standard is small for SBA's purposes. To qualify, a business must fit the size standard for the applicant's primary industry in 13 CFR 121.201, measured in annual receipts or employees. SBA measures size on the date the application is accepted for SBA processing, or for delegated loans the date the lender approves the loan.

A business over the standard can still qualify under the alternative standard: tangible net worth of $20 million or less and average net income after federal income taxes of $6.5 million or less over the prior two fiscal years. Source: SOP 50 10 8.1: Sec. A, Ch. 1, Para. D.1 (p. 14); Sec. A, Ch. 1, Para. D.2 (p. 14); 13 CFR § 121.301(b)(2).