Assisted living facility loans fund buying, building, expanding or refinancing a licensed assisted living or memory care community. Smaller and owner-operated facilities typically use SBA 7(a) or 504 loans from banks with senior care teams, while larger, stabilized properties may qualify for HUD’s Section 232 mortgage insurance program. The facility’s size, occupancy and operating history decide which route is realistic. This page is part of our medical practice financing hub.
An assisted living loan is part real estate loan and part operating business loan. Lenders value the building, but they repay from resident fees, so they look as hard at census, staffing and licensing as they do at the property. If you are new to commercial property debt, our overview of commercial loans is a useful primer.
The size of the market
The CDC’s National Center for Health Statistics counted 32,200 residential care communities in 2022, with 1,313,600 licensed beds and 988,800 current residents (CDC FastStats). Those communities range from small, home-like residences to large campuses, and financing options differ at each end.
Assisted living financing options compared
Figures checked on September 21, 2026. None of the lenders below publishes an interest rate or APR for assisted living loans, so ask each for a written quote showing the rate, every fee and the APR (annual percentage rate, which combines interest and fees into one yearly cost). HUD-insured loans also carry a mortgage insurance premium (MIP); ask for it to be shown separately.
| Option | Uses | Amounts | Term | Other published details |
|---|---|---|---|---|
| SBA 7(a) | Acquisition, 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 |
| SBA 504 | Buildings, land, long-life equipment; not working capital | Up to $5.5 million | 10, 20 or 25 years | Fixed rate tied to 10-year Treasuries; for-profit businesses only |
| Byline Bank (assisted living SBA loans) | Construction or renovation, business, franchise and real estate acquisition, first-time ownership | Up to $5 million | Up to 10 years for most uses; up to 25 years for real estate | “Up to 90% financing for acquisitions and up to 100% financing for expansions” |
| Live Oak Bank (senior care) | Residential assisted living: acquisition, refinancing, working capital. Seniors housing: acquisition, construction and renovation, refinance and bridge financing | SBA loans “up to $5 million and beyond”; Live Oak Express SBA loans up to $350,000 | Not published | Separate seniors housing team for commercial real estate projects |
| Busey Bank (SBA senior care lending) | Assisted living, memory care and other senior care: acquisition, construction, renovation, refinancing, working capital | Not published | “Loan terms up to 25 years” | SBA preferred lender |
| HUD Section 232 (FHA-insured, through approved lenders) | Purchase, refinance, new construction or substantial rehabilitation | Set by underwriting | 223(f): up to 35 years; new construction and substantial rehab: up to 40 years (each capped by remaining economic life) | Assisted living facilities must have at least 20 beds and be state licensed or regulated |
Sources: SBA 7(a), SBA 7(a) loan types, SBA 504, Byline Bank, Live Oak Bank residential assisted living, Live Oak Bank seniors housing, Busey Bank, HUD Section 232 Handbook.
SBA 7(a) and 504 loans
SBA loans suit owner-operators buying or expanding a single facility. A 7(a) loan can cover the purchase of the business, the building, working capital and furnishings together; the SBA lists “changes of ownership (complete or partial)” among eligible uses. A 504 loan finances the building and long-life equipment at a fixed rate “pegged to an increment above the current market rate for 10-year U.S. Treasury issues,” but it cannot be used for working capital. Since July 4, 2026, borrowers can combine 7(a) and 504 loans for up to $10 million in SBA-backed financing (SBA). The trade-off is paperwork and timing; our guide to SBA 7(a) vs. 504 vs. microloans explains the differences.
For acquisitions, SBA equity and seller-note rules are being revised under SOP 50 10 8.1, effective October 1, 2026 (SBA notice). Ask your lender which version applies and what equity injection it will require.
HUD Section 232
HUD describes Section 232 as “an FHA loan product that provides mortgage insurance for residential care facilities,” covering nursing homes, assisted living and board and care, and says it “may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project” (HUD). Under the Section 232 handbook, an eligible assisted living facility is “a proprietary, public or nonprofit project of at least 20 beds that is designed for frail elderly,” and must be licensed or regulated where it is located. The maximum term is 35 years (or 75% of the remaining economic life) for a 223(f) purchase or refinance, and 40 years (or three-quarters of remaining economic life) for new construction or substantial rehabilitation (HUD handbook).
Long, fixed terms are the draw. The trade-offs are processing time and paperwork. HUD said on July 10, 2025 that 232 applications had taken “up to 150 days” and launched an Express Lane for some 223(f) deals, which it said would cut wait times “by up to 90 percent.” To qualify for the Express Lane, a loan must meet criteria that include “a maximum of 70 percent loan to value,” a mortgage of no more than $50 million ($70 million in the greater New York City area), and an operator that has been in place for two or more years (HUD Express Lane). Because of those timelines, some owners use a bank bridge loan first; Live Oak, for example, offers bridge financing to government-backed lenders including HUD.
Which route fits your facility
- Small residential homes (under 20 beds): below HUD’s 20-bed minimum for assisted living, so SBA 7(a) and bank loans are the main options. Live Oak’s residential assisted living program is one example.
- Owner-operated facilities buying or building their property: SBA 504 for the real estate plus a 7(a) loan or line of credit for working capital.
- Buying an operating facility: SBA 7(a) for a smaller deal; a conventional bank or bridge loan for a larger one, possibly refinanced into HUD later.
- Larger, stabilized communities: HUD 232/223(f) for long-term fixed-rate debt, if the facility meets HUD’s requirements.
What lenders look for
- Occupancy and census history. Monthly occupancy history, and how it compares with nearby communities.
- Payer mix. The split between private-pay residents and any government-funded programs your state offers, and the rates each pays.
- Licensing and survey history. Current state licenses and recent inspection results.
- Operator experience. Who runs the facility day to day and their track record. HUD’s Express Lane, for example, looks for an operator in place for two or more years.
- Cash flow coverage. Whether net operating income covers the new debt with room to spare. See what a DSCR loan is for how lenders measure this.
- Property condition. An appraisal and, for older buildings, a property condition report and capital plan.
Common pitfalls
- Underfunding lease-up. A new or expanded facility takes time to fill. Budget working capital to cover payroll and debt service until occupancy is stable.
- Assuming the license transfers with the building. Licensing rules on a change of ownership vary by state. Confirm the process and timing with the state agency and a healthcare attorney before closing.
- Ignoring the property and operator split. Some facilities are owned by one entity and run by another under a lease. HUD’s handbook allows projects to be “leased to qualified Operators,” but lenders will underwrite both entities.
- Timing a HUD refinance too tightly. If your bridge or construction loan matures before a HUD loan can close, you may face extension fees. Build in a buffer.
- Comparing payments only. Compare APR, fees, prepayment terms and total repayment across offers.
If you also run in-home services, see home health agency loans. For buying an existing business in general, read everything you need to know about buying a business.
FAQ
Can I use an SBA loan to buy an assisted living facility?
Yes, if the business meets SBA eligibility rules. Banks such as Byline, Live Oak and Busey advertise SBA loans for assisted living. Byline lists up to 90% financing for acquisitions and terms up to 25 years for real estate.
What is the minimum size for a HUD 232 loan on assisted living?
HUD’s handbook requires an assisted living project to have at least 20 beds. It defines frail elderly as a person “of at least 62 years who is unable to perform at least three activities of daily living.”
How long can an assisted living loan run?
SBA 504 loans run 10, 20 or 25 years; Byline and Busey advertise terms up to 25 years; HUD 232/223(f) loans run up to 35 years, and HUD new construction loans up to 40 years, each limited by the building’s remaining economic life.
Can nonprofits use these loans?
SBA’s 504 eligibility rules require the business to “operate for profit”; ask a 7(a) lender to confirm eligibility for your entity type. HUD’s Section 232 assisted living definition includes proprietary, public and nonprofit projects.
Next step
Gather your monthly occupancy history, rent roll, licenses and recent financial statements. Our medical practice financing page explains how we compare SBA, bank and bridge offers from the lenders we work with, so you can see rate, fees and terms side by side.
Sources
- CDC National Center for Health Statistics: FastStats, residential care communities
- HUD: Office of Residential Care Facilities
- HUD: Section 232 Handbook, Production, Chapter 2
- HUD: Express Lane to expedite financing for residential care facilities
- 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: 504 loans
- U.S. Small Business Administration: Cumulative 7(a)/504 loan limit raised to $10 million
- U.S. Small Business Administration: Issuance of SOP 50 10 8.1
- Byline Bank: Assisted living SBA loans
- Live Oak Bank: Residential assisted living loans
- Live Oak Bank: Seniors housing
- Busey Bank: SBA senior care lending
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.