Home health agencies often finance an acquisition or start-up with an SBA 7(a) loan from a bank that lends to home care businesses, and cover payroll between claims with a line of credit or receivables financing. Lenders focus on payer mix, how quickly claims are paid and, for Medicare-certified agencies, whether the agency meets Medicare’s enrollment and ownership rules. This page is part of our medical practice financing hub.
The same lenders often serve Medicare-certified home health agencies, non-medical home care agencies and hospices. Most of this page applies to all three, but two Medicare rules covered below apply to home health agencies specifically, and both can change how a deal is financed.
Why cash flow is the central issue
Because aides and nurses are the service, payroll comes due every week or two whether or not claims have been paid. The Bureau of Labor Statistics counts 4,677,100 home health and personal care aide jobs in 2025, with a median pay of $17.21 per hour, and projects 18% employment growth from 2025 to 2035, with about 760,500 openings a year (BLS). With that many openings to fill each year, lenders look closely at an agency’s wage costs and staff turnover.
Reimbursement also moves. Since January 1, 2020, Medicare has paid home health agencies “a national, standardized 30-day period payment rate” (CMS). CMS estimated that its final rule for 2026 would decrease Medicare home health payments in aggregate by 1.3%, or $220 million, compared with 2025 (CMS 2026 final rule). Its July 1, 2026 proposal for 2027 would increase aggregate payments by an estimated 2.4%, or $420 million; that rule is not final (CMS 2027 proposed rule). Lenders build these swings into their cash flow tests, so a heavy Medicare concentration can affect how much they will lend.
Home health financing options compared
Figures checked on September 21, 2026. None of the lenders below publishes an interest rate or APR. Ask for a written quote with the rate, every fee and the APR (annual percentage rate, which combines interest and fees into one yearly cost). Receivables financing is often priced as a fee on each invoice rather than an interest rate, so ask for the total cost in dollars as well.
| Lender or product | What it finances | Amounts and terms published | Other published details |
|---|---|---|---|
| Live Oak Bank (home care) | “Acquisition and expansion” for home care, home health and hospice businesses | SBA loans “up to $5 million and beyond”; Live Oak Express SBA loans up to $350,000 | Rates and terms not published |
| Byline Bank (home health care SBA loans) | Business and franchise acquisition, expansion, real estate, debt refinance, first-time ownership | Up to $7 million; “up to 10 years for most uses, and up to 25 years for real estate” | “Up to 90% financing for acquisitions and up to 100% financing for expansions”; no prepayment penalty |
| Busey Bank (SBA senior care lending) | Home health service businesses among other senior care; acquisitions, partner buyouts, expansion, refinancing, equipment and working capital | “Loan terms up to 25 years” | SBA preferred lender; amounts not published |
| SBA 7(a) (any participating lender) | Changes of ownership, working capital, equipment, real estate, refinancing | Up to $5 million; generally 10 years or less unless real estate or long-lived equipment is financed | Rate negotiated with the lender, subject to SBA maximums |
| Business line of credit | Payroll and other short-term gaps | Varies by lender | Interest on the amount drawn |
| Receivables financing or factoring | Advances against unpaid claims | Varies by provider | Usually priced as a fee per invoice or period |
Sources: Live Oak Bank, Byline Bank, Busey Bank, SBA 7(a), SBA 7(a) loan types.
SBA 7(a) loans from home care lenders
SBA 7(a) is a common route for buying an agency, because it can combine the purchase price, working capital and equipment in one loan. The SBA lists “changes of ownership (complete or partial)” as an eligible use, and interest rates “are negotiated between the borrower and the lender, but are subject to SBA maximums.” Banks with home care teams, such as the three above, know how to read agency financials. The trade-off is paperwork and time; see our SBA loan timeline.
Lines of credit
A business line of credit lets you draw for payroll and repay when claims pay out, so you only pay interest while the money is out. It suits an established agency with steady collections. For more on using SBA money for this purpose, see SBA loans for working capital.
Receivables financing
A receivables lender or factor advances cash against claims you have already billed. Approval leans on the quality of your payers more than on your own credit, which helps a younger agency. It usually costs more than a bank line, and Medicare and Medicaid claims are handled differently from commercial invoices, so ask any provider how it treats them before you sign. See medical receivables factoring; agencies that also place staff may find healthcare staffing factoring relevant.
Two Medicare rules that affect financing
Starting a new agency: initial reserve operating funds
A new home health agency entering Medicare must show it has enough money to operate “for the three-month period after Medicare billing privileges are conveyed,” and keep those funds available through enrollment. Under the regulation, at least 50% of the required reserve must be non-borrowed funds; the rest may come from borrowing or a line of credit “from an unrelated lender,” with documentation from the lender that the funds are available (42 CFR 489.28). If you plan to use a loan or line for part of the reserve, tell the lender early so it can provide the letter or attestation Medicare asks for.
Buying an agency: the 36-month rule
If a home health agency changes majority ownership within 36 months of its initial Medicare enrollment or its last change in majority ownership, “the provider agreement and Medicare billing privileges do not convey to the new owner.” The buyer must enroll as a new agency and go through a state survey or accreditation, unless an exception applies, such as the agency having filed two consecutive years of full cost reports (42 CFR 424.550). Lenders will want to know which side of this rule the deal falls on, because it decides whether the agency can bill Medicare from day one. A healthcare attorney should confirm it before you sign.
What lenders look for
- Payer mix and collections. The share of revenue from Medicare, Medicaid, managed care and private pay, and how long each takes to pay.
- Licensing and certification. State licenses, Medicare certification or accreditation, and recent survey results.
- Referral sources. Whether referrals come from many hospitals and physicians or depend on one or two.
- Staffing. Caregiver turnover, wage rates and the management team’s experience in home care.
- Financials. Tax returns, profit and loss statements and an accounts receivable aging report. Our guide to how lenders analyze cash flow explains the tests.
Common pitfalls
- Buying inside the 36-month window without planning for it. If billing privileges do not transfer, you may need working capital to carry the agency through a new enrollment.
- Using short-term, high-cost advances for payroll. Daily or weekly repayments can compound the cash gap they were meant to fix. Compare the total cost in dollars with a line of credit or receivables financing.
- Relying on one payer or referral source. A rate change or a lost referral relationship can cut revenue quickly.
- Stacking liens. A receivables lender often asks for a first lien on receivables, which can conflict with a bank’s blanket lien. Sort out lien priority before you sign; see what a UCC filing is.
If you are comparing a home health agency with a residential care business, see assisted living facility loans. For the acquisition process in general, read medical practice acquisition loans.
FAQ
Can I get an SBA loan to buy a home health agency?
Yes. Changes of ownership are an eligible SBA 7(a) use, and banks such as Live Oak, Byline and Busey advertise SBA lending to home health businesses. SBA equity and seller-note rules for acquisitions are being revised under SOP 50 10 8.1, effective October 1, 2026 (SBA notice), so ask your lender which rules apply to your loan.
Can borrowed money count toward Medicare’s capitalization requirement?
Partly. The regulation requires at least 50% of the initial reserve operating funds to be non-borrowed; the remainder can come from a loan or line of credit from an unrelated lender, with supporting documentation.
How much can a home health agency borrow?
It depends on cash flow and the lender. SBA 7(a) loans go up to $5 million. Byline Bank lists amounts up to $7 million on its home health page and up to 90% financing for acquisitions.
Is factoring a good fit for a home health agency?
It can bridge the gap between payroll and payment, especially for a newer agency. It usually costs more than a bank line of credit, so some agencies use it while they build the history a bank wants to see.
Next step
Pull together your payer mix, an accounts receivable aging report and recent tax returns, and note your Medicare enrollment and ownership dates. Our medical practice financing page explains how we compare SBA loans, lines of credit and receivables financing from the lenders we work with.
Sources
- U.S. Bureau of Labor Statistics: Home health and personal care aides
- CMS: Home Health PPS
- CMS: CY 2026 Home Health PPS final rule fact sheet
- CMS: CY 2027 Home Health PPS proposed rule fact sheet
- eCFR: 42 CFR 489.28, Special capitalization requirements for HHAs
- eCFR: 42 CFR 424.550, Prohibitions on the sale or transfer of billing privileges
- Live Oak Bank: Home care business loans
- Byline Bank: SBA loans for home health care businesses
- Busey Bank: SBA senior care lending
- U.S. Small Business Administration: 7(a) loans
- U.S. Small Business Administration: Types of 7(a) loans
- U.S. Small Business Administration: 7(a) terms, conditions and eligibility
- U.S. Small Business Administration: Issuance of SOP 50 10 8.1
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.