As the population ages, the demand for assisted living facilities (ALFs) continues to grow, creating a great opportunity for entrepreneurs like Laura and her husband, who own an ALF and are looking to expand their business. However, financing the expansion of an ALF can be a complex process, especially when it comes to purchasing another property, building out, and furnishing it. In this blog post, we will explore some financing options available to ALF owners like Laura, who want to expand their business.

The SBA 7A Loan

One of the best options for financing an ALF expansion is the Small Business Administration (SBA) 7A loan. This loan program offers long-term financing for small businesses and provides funds for property acquisition, building out, and furnishing the new property. The SBA 7A loan requires a minimum down payment of 10%, and the borrower must have good credit and cash flow. If you have been in business for over three years, you can potentially get up to 100% financing for your new acquisition.

Using Equity

If you have equity in your existing property, you can use it to finance your expansion. You can either do a separate SBA loan for the new property or pull out equity from your existing property and use it for the down payment on the new property. Using equity is a great option if you want to avoid coming in with a large down payment, and you have enough equity in your existing property.

Benefits of SBA Loans

SBA loans are a great option for ALF owners because they offer a low cost of funds and are relatively easy to qualify for, especially if you have been in business for over three years. Additionally, with an SBA 7A loan, you can get up to $5 million in financing, which is great if you plan to expand your business even further.

Conclusion

Expanding your ALF business can be a lucrative endeavor, but it requires careful planning and financing. If you are like Laura and her husband and looking to expand your ALF business, the SBA 7A loan is a great option to consider. With good credit, cash flow, and equity, you can potentially get up to 100% financing for your new acquisition, building out, and furnishing. Additionally, using an SBA loan can help you save on costs and make the financing process easier, so you can focus on growing your business.