Assisted living facilities and home healthcare services are necessary and rewarding businesses. Like all businesses, however, they require cash to start up and operate, and very few people can foot those bills without financing of some kind. Fortunately, there are several business loan sources to consider, ranging from the most typical to some you may not be aware of. We’ll look at four of the most common ways to secure funding.
Traditional Bank Loans
More than likely, when someone says the word “loan,” you think of traditional bank loans. These come from lending institutions backed by the FDIC and are very common and secure. Banks generally extend good rates of about 6 to 10% to assisted living facilities, with a decent term for repayment of about 3 to 7 years. The downside to traditional bank loans is that the decision makers evaluate each applicant very closely to minimize risk. Even if your credit score is great, this can still be a time-consuming process, so if you need funds immediately, a traditional bank loan may not be your best option.
Lines of Credit
A line of credit is another very common funding source for assisted living facilities. Lines of credit are generally also offered through traditional lending institutions, but unlike bank loans, you will be approved to borrow up to a certain amount. You then can take cash out as you need it, and only repay what you take plus interest. Your credit will need to be a little better, and the term is a little shorter (usually 1-3 years), but interest rates are comparable.
If you need cash quickly, cash advances are an option. With cash advances, assisted living facilities to pay a portion of future earnings to a financer through credit card transactions or ACH. Once this process is set up, cash is available almost instantly, sometimes within a day. The terms are shorter (3 to 24 months) but you pay automatically as you go, with low interest-usually less than 2%.
SBA Loans for Home Health Care Agencies
The U.S. Government’s Small Business Administration (SBA) has a loan program that helps businesses who do not have the credit to secure traditional bank loans to receive funds from banks. If approved, the SBA will assume a portion of the risk and guarantee part of the loan to the bank, making them more likely to approve you. Terms and Interest are the same as traditional banks.