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How Much Does It Cost to Start a Nursing Home in 2026?
A skilled nursing facility sits behind two gates that belong in any startup cost estimate. SBA's SOP 50 10 8.1, in effect since 1 October 2026, names nursing homes among its examples of a Limited or Special Purpose Property, which raises your minimum 504 contribution from 10% to 15%, and to 20% if the business is also a New Business (in operation for 2 years or less when the loan is approved). Separately, a facility enrolling in Medicare or Medicaid as an institutional provider must submit a federal application fee, set at $750.00 for calendar year 2026 (90 FR 55738). The fee is trivial. The survey and certification behind it are not, and they set the date a Medicare provider agreement takes effect.
Verify every figure below with the named agency or lender before committing capital. We are not a lender, a CDC or attorneys. SBA revises its loan program requirements from time to time, CMS announces a new application fee each year, and licensure is a matter of state law. Where this page refers to construction or equipment costs we have not surveyed them and say so.
Nursing home, not assisted living
These are different businesses, and treating them as one is an error we see in planning documents. Under the Medicare statute a skilled nursing facility "must provide 24-hour licensed nursing service" (42 U.S.C. 1395i-3(b)(4)(C)(i)), and a certification of compliance is the determination that a facility is eligible to participate in Medicare as a skilled nursing facility or in Medicaid as a nursing facility (42 CFR 488.330(b)(1)). Assisted living has no entry in the Medicare statute's list of providers of services, which names a skilled nursing facility (42 U.S.C. 1395x(u)); its licensing is a question for your state agency.
SBA, for its own purposes, groups them. The entry in the Limited or Special Purpose Property list reads "Nursing homes, including assisted living facilities". So both are caught by the same 504 contribution rule even though the businesses differ.
Gate one: SBA names you
Section C of SOP 50 10 8.1, the 504 part, prints a list of examples of properties SBA considers to be a Limited or Special Purpose Property (Chapter 1, under Borrower's Contribution). Nursing homes are on it, in those words. The full list, verbatim (emphasis added):
Amusement parks; Bowling alleys; Car wash businesses; Cemeteries; Cold storage facilities where more than 50% of total square footage is equipped for refrigeration; Dormitories; Farms, including livestock and dairy facilities; Funeral homes with crematoriums; Gas stations; Golf courses; Hospitals, surgery centers, urgent care centers, and other health or medical facilities; Hotels, motels, and other lodging facilities; Marinas; Mines; Nursing homes, including assisted living facilities; Oil wells; Quarries, including gravel pits; Railroads; Sanitary landfills; Service centers (e.g., oil and lube, brake, or transmission centers) with pits and in-ground lifts; Sports arenas; Swimming pools; Tennis clubs; Theaters and auditoriums; and Wineries.
The SOP requires the CDC to reach and record a conclusion:
CDCs must address whether the Project Property is Limited or Special Purpose in their credit memorandum and include an explanation of their conclusion.
The list "is not intended to be all-inclusive", so an unnamed property type still has to be reasoned through. Nursing homes are a named example: budget on the higher contribution and ask your CDC how its credit memorandum will address the property.
What that costs
The same chapter, under Third Party Lender Participation, prints a table of Typical 504 Structures. Its figures, with percent signs added:
| Party | Standard Financing Structure | New Business OR Limited or Special Purpose Property | Both New AND Limited or Special Purpose Property |
|---|---|---|---|
| Third Party Lender | 50% | 50% | 50% |
| CDC/SBA (debenture) | 40% | 35% | 30% |
| Borrower | 10% | 15% | 20% |
The SOP adds that "generally" a Third Party Lender provides "50% or more of the financing" (see SBA 504 loan requirements). In the two right-hand columns all three rows are limits: the debenture figures are ceilings, and the lender's and the borrower's figures are floors (13 CFR 120.920(a) requires Third Party Loans of at least 50 percent of Project cost for a limited or single purpose asset). You can work your own number out in a few seconds with our free SBA equity requirement calculator, which uses the same SOP table.
The rule is stated under Borrower's Contribution: a business with a Limited or Special Purpose Property "Must contribute at least 15%, in which case the Debenture will finance no more than 35% of the Project and at least 50% of the Project financing will be from banks or other financial institutions, state or local government, or foundations or other non-profit institutions", and "Must contribute at least 20%, if the Project involves a new business". It adds: "If a Project will finance both a New Business and a Limited or Special Purpose Property, the Applicant must contribute at least 20% of the Project cost."
Worked at a Project cost of $8,000,000, excluding administrative costs (13 CFR 120.910(a)), a round figure chosen for the arithmetic and not a cost estimate:
| Scenario | Your minimum contribution | Versus the standard 10% |
|---|---|---|
| Standard structure, 10% | $800,000 | Reference only |
| Limited or Special Purpose Property, not a New Business, 15% | $1,200,000 | +$400,000 |
| Limited or Special Purpose Property and a New Business, 20% | $1,600,000 | +$800,000 |
Which row applies turns on whether the business is a New Business. Appendix 3 of the SOP defines the term, in an entry tagged for both 7(a) and 504, as:
A business that has been in operation for 2 years or less at the time the loan is approved.
Three details matter. The clock starts with revenue: "Operations are deemed to begin when the business begins generating revenue from its intended operations". An older business "may be considered a New Business if it is a change of ownership that will result in new, unproven ownership/management and increased debt unrelated to business operations", so buying an established facility does not by itself keep you in the 15% row: "the CDC must review the management and level of debt in order to decide whether an additional Borrower’s contribution of 5% is necessary". And adding a facility does not by itself put an operator in the 20% row: "When an existing business starts a business that is in the same 3-digit NAICS code with identical ownership, and they are Co-Borrowers, SBA considers this to be a business expansion and not a new business." The regulation draws the same two-year line: the contribution is at least 15 percent if the borrower "has operated for two years or less" (13 CFR 120.910(a)(1)). This is not the 7(a) start-up test, which is shorter: a business is a start-up for the 10% equity injection "if it has been in operation (i.e., generating revenue from intended operations) for 1 year or less".
Gate two: CMS, and the fee that is the smallest part of it
A skilled nursing facility enrolls in Medicare as an institutional provider, on Form CMS-855A (edition 09/24) or its PECOS equivalent, and the fee notice counts Medicaid-only nursing facilities as institutional providers too. CMS announces the fee each year by notice in the Federal Register. For calendar year 2026 the notice announces:
a $750.00 calendar year (CY) 2026 application fee for institutional providers that are initially enrolling in the Medicare or Medicaid program or the Children's Health Insurance Program (CHIP); revalidating their Medicare, Medicaid, or CHIP enrollment; or adding a new Medicare practice location
That is 90 FR 55738, published 3 December 2025 and effective 1 January 2026. The fee "is required with any enrollment application submitted on or after January 1, 2026, and on or before December 31, 2026". No calendar year 2027 notice had been published when we searched the Federal Register on 10 October 2026.
Do not let the size of that number mislead you. $750 is a rounding error on a multi-million dollar project. It belongs in your plan because of what sits behind it: survey and certification stand between a finished building and a Medicare provider agreement, and eligibility for Medicare payment turns on that agreement (42 U.S.C. 1395cc(a)(1)). The state survey agency surveys the facility (42 CFR 488.330(a)(1)(i)). Under 42 CFR 489.13(b) the agreement is effective on the date the survey is completed if every applicable federal requirement is met that day, and the effective date "may not be earlier than the latest of the dates on which CMS determines that each applicable Federal requirement is met".
Model that date explicitly. A projection that shows Medicare revenue beginning in the month the certificate of occupancy lands assumes the survey is completed, and every federal requirement met, in that same month.
If you are using 7(a) rather than 504
For a Start-Up Business, Section B, Chapter 1 of the SOP (Standard 7(a) loans, those greater than $350,000) says, and Chapter 2 repeats for 7(a) Small:
SBA considers an equity injection (Applicant contribution) of at least 10 percent of the total project costs (all costs required to become operational, regardless of the source of funds, except for lines of credit and 504 loans) to be necessary for a Start-Up Business to operate on a sound financial basis. All 7(a) loans made to a Start-Up Business require a 10% equity injection based on the project cost; however, loans approved more than 90 days apart from each other are considered to be separate projects.
On our reading, the phrase "all costs required to become operational" is expensive for a nursing home, because it reaches the pre-revenue period above: staffing up before you have residents, the survey process, and the working capital that bridges to first reimbursement. Buying an existing facility with a 7(a) loan is a change of ownership, with its own equity rule in Appendix 15; see SBA equity injection requirements.
What published cost estimates are worth
We have not surveyed skilled nursing construction costs and will not present someone else's range as though we had. A published range is hard to apply to your own project for four reasons:
- Bed count scales the whole budget, so a figure that is not stated per bed tells you little.
- Licensure standards are set by your state, and federal long term care requirements add room standards. For facilities newly certified after 28 November 2016, bedrooms "must accommodate no more than two residents" and "each resident room must have its own bathroom equipped with at least a commode and sink" (42 CFR 483.90(e)(1)(i) and (f)): construction cost, not paperwork.
- Payer mix is the business model. A Medicaid-weighted facility and a private-pay facility with the same bed count are not the same investment.
- Pre-revenue carry has to be in the number: payroll and debt service between completion and the first reimbursement.
What your plan should show
Our recommendations, not a statement of what a lender or CDC will ask for:
- A project cost schedule on the right base, with your contribution identified and its source documented: all costs required to become operational for a 7(a) Start-Up Business; the Project cost above for 504, where 13 CFR 120.884(d)(1) names working capital among the costs 504 loan proceeds may not pay.
- Monthly cash flow with an explicit, dated certification and census ramp. For a new business the SOP's 504 application list asks for "a monthly cashflow analysis for the first 12 months of operations or for 3 months beyond the breakeven point (whichever is longer)".
- Payer mix assumptions with the reimbursement basis stated, and sensitivity on it.
- The licensure path in your state, and the CMS enrollment route if you will bill Medicare or Medicaid. On eligibility the SOP says: "Businesses that are licensed as nursing homes, assisted living facilities, or state-licensed equivalents, and provide healthcare and/or medical services are eligible." (Section A, Chapter 1, Passive Businesses).
- A staffing model against any federal and state minimums, costed from the month you must hire rather than the month you open.
- Your 15% or 20% contribution planned for, as a minimum, and the classification confirmed with your CDC.
We write SBA business plans and financial models for exactly this kind of filing, including the project cost build-up and the monthly cash flow with a certification and census ramp that a credit memorandum is written from. Fees are fixed and published, and we never charge a percentage of anything you borrow or raise.
Frequently asked questions
Is a nursing home a special purpose property for SBA?
Yes, for the SBA 504 program. "Nursing homes, including assisted living facilities" is an example in the Limited or Special Purpose Property list in SOP 50 10 8.1. The list is not all-inclusive, and the CDC must explain its conclusion in its credit memorandum.
How much equity do I need for an SBA 504 loan on a nursing home?
Under SOP 50 10 8.1 a business with a Limited or Special Purpose Property, and nursing homes are a named example, must contribute at least 15% of the 504 Project cost, or 20% if it is also a New Business (2 years or less in operation at approval). On $8,000,000 that is $1,200,000 or $1,600,000.
What is the Medicare application fee for a nursing home in 2026?
$750.00 for calendar year 2026, for institutional providers initially enrolling in Medicare, Medicaid or CHIP, revalidating enrollment, or adding a new Medicare practice location (90 FR 55738). It covers applications submitted from 1 January to 31 December 2026. No 2027 amount had been published by 10 October 2026.
Does the $750 fee cover certification?
No. The $750.00 is the CMS enrollment application fee. Survey and certification are separate, and under 42 CFR 489.13 a Medicare provider agreement takes effect no earlier than the date CMS determines every applicable federal requirement is met.
Is assisted living treated the same way?
For the SBA 504 contribution, yes: the SOP 50 10 8.1 list entry reads "Nursing homes, including assisted living facilities". For Medicare, no: the statute's list of providers of services names a skilled nursing facility and has no entry for assisted living (42 U.S.C. 1395x(u)).
Am I a new business if I already operate other facilities?
Not necessarily. Under Appendix 3 of SOP 50 10 8.1, when an existing business starts a business in the same 3-digit NAICS code with identical ownership, and they are Co-Borrowers, SBA considers it a business expansion. Otherwise the 504 test is 2 years or less in operation at approval, counted from first revenue; the 7(a) start-up test is 1 year or less.
This page summarizes what SBA SOP 50 10 8.1 says as at 10 October 2026, and the CMS application fee notice at 90 FR 55738. It is general information, not lending, legal, tax or healthcare regulatory advice, and it is not a commitment to lend. SBA revises its loan program requirements from time to time, CMS announces a new application fee each year, and licensure is a matter of state law. Confirm every figure and classification with your lender, your CDC and the relevant state agency before you commit capital.