Financing Facility Improvements in Elderly Daycare with Small Business Loans
June 03, 2025 | Last Updated on: June 04, 2025
By Dori Zinn
Taking care of older adults is no easy feat. According to the U.S. Department of Health and Human Services(HHS), there are more than 15,000 certified nursing homes nationwide, housing nearly 1.3 million residents. These facilities provide essential medical and personal care for individuals who can no longer live independently, reflecting the growing need for senior care as America’s population continues to age.
But not all older adults require around-the-clock care. In response to evolving needs and preferences, there’s a growing trend of adult daycare centers—facilities that offer mental, emotional, social, and psychological activities for seniors who live at home but still need daytime support and engagement. These centers provide a vital bridge between home care and full-time nursing facilities, allowing older adults to maintain independence while receiving the attention they need.
If you’re considering opening your own adult or elderly daycare center, you might need a senior care loan to help you start your business. From covering startup costs to funding renovations or purchasing equipment, the right financing can help turn your vision into a thriving care facility.
What are senior daycares?
Senior and adult daycares offer a wide range of services and programs targeting older, independent living folks or those who have the help of a home care aide but look for various relationships and connections with others who are like them.
There’s a growing demand for senior care outside of assisted living facilities and nursing homes, showing that adult daycares are in need. Senior daycares are typically less expensive to run and manage compared to nursing homes , especially since there’s no need for senior living and lodging.
According to the Centers for Disease Control and Prevention (CDC), there are more than 5,000 adult daycare centers nationwide. This is up from roughly 4,600 in 2010. It could be even higher, as the National Adult Day Services Association estimates more than 7,500 adult day centers nationwide.
What is a senior care loan?
A senior care loan is a type of business loan you can use to pay for your elder care needs, regardless of what those needs are. Senior care business loans allow you to fund necessary startup costs or streamline cash flow for an already existing elder care center. Using elder care loans to start your business could see immediate success as the trend grows. You can use a senior care loan for:
- Covering down payment or leasing costs to secure your property.
- Paying for utility fees or bills as you’re setting up your business.
- Buying equipment, software, or supplies to start your company or make necessary upgrades.
- Running payroll so your employees are never behind on getting paid.
- Expanding your business to open additional locations, long-term care services, or healthcare needs.
- Hiring skilled nursing professionals and other employees while offering a competitive salary and compensation package.
- Branching out to provide other services, such as senior housing or assisted living communities.
Since there’s a wide range of uses, you can use senior care business loans for nearly anything you need to fund your elderly daycare center.
What type of senior care loan should you get?
A few different financing options are available for businesses looking to launch or update their existing companies.
1. SBA loans for daycare centers
An SBA loan is a type of loan backed by the Small Business Administration, or SBA. There are a few different SBA loan programs available to qualifying borrowers. The SBA acts as the lending partner, providing financial institutions with funding for small businesses.
An SBA loan for daycare facilities tends to have lower interest rates, flexible repayment terms, and no need for collateral to qualify for a loan. There are short-term and long-term loan products available, depending on which lender you choose, your business, the loan amount, and what you’ll use the funds for. You can choose from:
- SBA 7(a) loans: The main SBA loan program, financing everything from buying or improving real estate to providing working capital for everyday costs. You can buy new equipment, upgrade existing equipment, and refinance eligible business debt with an SBA loan. These loans also cover furniture, supplies, and other materials, among other necessary financing needs.
- 504 loans: These loans are long-term, fixed-rate loans targeting for-profit companies worth at least $20 million. You can use these types of loans to buy new land or upgrade existing properties, some qualifying debt consolidation, or improve your current facilities. You can’t use a 504 loan to purchase inventory or fund working capital. Borrowers can’t use these funds to invest in rental real estate or refinancing business debt.
- Microloans: These small loans are best for small businesses and some non-profit childcare centers looking to jump-start their business or expand an existing company. Microloans are capped at $50,000.
Depending on the type of loan, borrowers can get as little as $500 or upwards of $5.5 million for business-related needs. Your care facility might determine what loans you're eligible for.
2. Business line of credit
If you want to borrow money as needed, a business line of credit might be a better financing fit. This revolving line of credit — like a credit card — covers most business needs, whether funding payroll, working capital, or paying for an emergency expense.
A lump-sum senior care loan requires borrowers to take out the full amount at once. A business line of credit approves your financing needs up to a certain amount. Once you make payments on what’s borrowed, you can spend up to your approved amount again.
3. Equipment financing
If you have a specific need, you can look for targeted equipment leasing and equipment financing options rather than a general senior care loan.
Equipment financing lets you fund the purchase of equipment that acts as collateral. It’s easier to qualify for this type of loan since it’s secured, but if you fall behind or stop making payments, your lender could seize the equipment.
How to qualify for a senior care loan
Not everyone meets the eligibility requirements for a senior care loan. Some senior care business loan options require collateral, a good credit score, or detailed documentation of the loan’s potential use. Pricing and loan terms vary based on your lender and needs.
- Compare lenders. There’s no standard across all lenders, meaning you could meet eligibility requirements with one lender but not another. Find ones that offer the lowest interest rates, fewest fees, and fastest funding.
- Look for prequalification. A prequalification option lets you see if you’re eligible for a loan without completing a full application or triggering a hard credit check. Self-input your credit score and lending details to see which financial institutions will offer you a senior care loan.
- Get your documents in order. Make sure you have the necessary paperwork, like bank statements and tax documents for yourself and your business, a detailed outline of what the senior care loan will be used for, and any other proof required by the bank, credit union, or online lender.
- Complete an application. Once your paperwork is in order, start your application. Some lenders have a simple user experience and give you results right away. Other lenders might require you to speak to a representative or visit a branch for ongoing help.
- Get approved and receive funds. After completing an application and if you're approved, sign your approval letter. Create an account and add your bank account information to get your senior care loan as soon as possible.
The bottom line
If you’re trying to open up an adult day care or provide skilled nursing facilities, there are several elder care loan options available to help you get started. Before submitting an application, take time to explore all your financing options—whether that’s a traditional bank loan, an SBA loan, or alternative lenders that specialize in healthcare businesses. Understanding the full range of financial products at your disposal can help ensure you choose the most cost-effective and sustainable option for your unique situation.
As you evaluate potential loans, consider key factors such as interest rates, repayment terms, collateral requirements, and the lender’s experience with elder care businesses. It can also be helpful to consult with a financial advisor or business consultant who understands the nuances of healthcare financing. With a solid financial foundation and a clear understanding of your funding strategy, you’ll be better prepared to launch or expand a facility that delivers high-quality care and meets the growing needs of your community.
FAQs about senior care loans
Does the government pay for adult day care?
There are some SBA loans for daycare centers. You may want an SBA loan for daycare if your business needs to cover cash flow, upgrade equipment, or pay for other business needs. The Small Business Administration, or SBA, backs this type of senior care loan.
How much does elderly day care cost?
Elder care costs depend on what the center offers, where your business is located, and other factors. It’s usually less expensive to run an adult daycare compared to assisted living, senior housing, and similar senior living options.
Does the VA pay for adult day care?
Veterans Affairs, or the VA, offers some adult day healthcare options for veterans in need. These services range from dressing and eating to companionship for isolated veterans. They are available at VA centers and not necessarily as standalone facilities, allowing veterans to pay little to no extra cost for adult day healthcare services.
Does Medicaid pay for adult day care?
You might qualify for an adult daycare waiver through Medicaid. However, some services and instances might not be eligible for the waiver. You may need to provide additional proof or corresponding documentation that you meet the eligibility requirements for the Medicaid waiver.
Is elder care a good business?
Adult daycare can be an excellent business, as older folks want a place to visit others like them, make connections, and enjoy their time. As the population ages older than ever before, more people will search for adult day services. If you want to open an adult daycare, you may need a senior care loan to get started.
