Senior Care Business Financing: How to Apply
Yet an aging population and an ever-increasing average life span mean the industry’s long-term fundamentals are promising. Senior care entrepreneurs are turning to financing to get through the short-term struggles and capitalize on future growth.
Senior care business loans, credit lines, and cash advances are all viable options depending on the situation. To help you choose the right financing option for your business, we’ll review popular options and common uses of funds for senior financing. Then we’ll summarize how the application process works.
What to Consider Before You Apply for a Senior Care Business Loan
If you’re struggling to fund critical business operations, it can be tempting to rush into the application process. However, it pays to take your time, explore your options, and research lenders before you apply.
Here are several popular senior care lending solutions that business owners should keep in mind:
1. Traditional small business loans or credit lines
Traditional loans and credit lines offer pretty large amounts for competitive rates. However, you’ll need excellent credit and a long track record of business success to qualify. Yet even with solid finances, the application and funding process can take months to complete.
2. Senior care business financing from an alternative lender
Alternative lenders may specialize in senior care financing, or they may offer more generic small business loans or lines of credit. In either case, funding from alternative lenders is typically more expensive than traditional financing. However, alternative lenders have more lenient qualification criteria and fund your loans much faster than traditional lenders.
3. Small Business Administration (SBA) and HUD Loans
SBA loans are originated and serviced by SBA-approved banks and guaranteed by the SBA. You can use SBA loans for almost any expense related to operating your business. SBA guarantees make these loans very affordable, but the application process is highly competitive.
The U.S. Department of Housing and Urban Development (HUD) provides HUD loans. Compared to SBA loans, the use of funds for these loans is more restrictive. Through the HUD 232/223 loan programs, you can pay for the construction, acquisition, and renovation of senior living facilities (such as nursing homes or assisted living communities).
4. Equipment Loans
If you’re looking for senior care business financing to cover the cost of equipment, equipment loans are a great option. With an equipment loan, the equipment you purchase serves as collateral on loan. This collateral helps reduce the loan cost and makes it easier to obtain. Of course, the one drawback is that you can only use equipment loans to pay for equipment.
How to Apply for a Senior Care Business Loan
Depending on the loan and lender, the process of applying for a senior care business loan may vary. For instance, with a HUD loan, you’ll have several steps related to property appraisal, insurance, and construction that you wouldn’t face with an equipment loan.
However, you can generally expect to fill out an application, provide personal and business records, and share financial information. You’ll need to supply documents such as:
- Financial Statements
- Credit Reports
- Legal Documents
Depending on the lender, you may also need to prepare and submit a business plan with your application. We recommend checking with individual lenders for more specifics on their application process. You can also read our guide to applying for a small business loan for general application guidance.
How to Use Senior Care Financing
Whichever financing options you choose, senior care financing isn’t cheap. So using the funds, you receive wisely and getting a return on your debt is critical. If you’re struggling to recruit and retain quality staff, that may be the place you start. However, the best use of your funds also depends on your business’s needs.
We suggest taking your time in deciding how to deploy your small business financing. If you’re stuck or need help starting your brainstorm, a few ways you can spend a senior care business loan include:
- Property acquisition or refinancing
- Facility renovations
- Equipment upgrades
- Job advertisements and compensation packages
- Payroll and inventory
- Rent, utilities, or taxes
Is Senior Care Business Financing Right for You?
Medical business financing is worth considering if you don’t have the cash you need to operate or grow your senior care business. While you will incur fees and interest expenses, you should earn a sufficient return on your debt to make up for it. Of course, that depends on your ability to deploy your funds in a timely and efficient manner.
Therefore, finding senior care financing that doesn’t cut too far into your profits and fits your timeline is vital. With both those criteria met, senior care business financing can be just the thing you need to help your business thrive.
Editor’s Note: This post was updated for accuracy and comprehensiveness in June 2022.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.