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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 most startup cost articles never mention. SBA names nursing homes explicitly as a Limited or Special Purpose Property, which raises your minimum 504 contribution from 10% to 15%, and to 20% if the business is also new. Separately, if you intend to bill Medicare or Medicaid you must enroll as an institutional provider and pay a federal application fee, set at $750.00 for calendar year 2026 (90 FR 55738). The fee is trivial. The certification process behind it is not, and it is the thing that determines when revenue actually starts.
Verify every figure below with the named agency or lender before committing capital. SBA policy is reissued regularly, the CMS application fee is reset annually, and state licensure requirements for skilled nursing vary substantially. 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 conflating them is the most common error in planning documents we see. A skilled nursing facility provides 24-hour nursing care, is certified by CMS if it bills Medicare or Medicaid, and carries a clinical staffing model. An assisted living facility is licensed by the state, is generally not Medicare-certified, and is a residential business with services attached. The capital requirement, the regulatory path and the revenue model all differ.
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 equity rule even though almost nothing else about them is the same.
Gate one: SBA names you
SOP 50 10 8.1, the version in force as of today, contains a list of property types SBA considers Limited or Special Purpose. Nursing homes are on it, in those words. The full list, verbatim:
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.
Where a property type is not named, that duty involves real reasoning, because the SOP says the list "is not intended to be all-inclusive". Nursing homes are named, so there is nothing to reason about and nothing to argue.
What that costs
SOP 50 10 8.1 sets out the typical 504 structures, reproduced from the SOP's own table:
| Party | Standard financing structure | New Business or Limited/Special Purpose Property | Both New Business and Limited/Special Purpose Property |
|---|---|---|---|
| Third Party Lender | 50% | 50% | 50% |
| CDC / SBA debenture | 40% | 35% | 30% |
| Borrower | 10% | 15% | 20% |
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 SOP states it directly: 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 "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, which is a plausible order of magnitude for a purpose-built skilled nursing facility with real estate, though you should build your own figure:
| Scenario | Your contribution | Versus the standard 10% you cannot use |
|---|---|---|
| Standard structure (not available here) | $800,000 | Reference only |
| Established operator, existing facility | $1,200,000 | +$400,000 |
| New business building or acquiring a facility | $1,600,000 | +$800,000 |
The SOP's start-up test decides which row you are in, and it is about the business rather than the operator:
SBA considers a business to be a "start-up" for the purpose of determining equity injection requirements 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
If the facility will bill Medicare or Medicaid, it must enroll as an institutional provider. CMS sets the application fee annually 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, effective 1 January 2026, and it applies to enrollment applications submitted on or after that date.
Do not let the size of that number mislead you. $750 is a rounding error on an eight-figure project. The reason it belongs in your plan is what it signals: enrollment, survey and certification is a process with a queue, and your revenue does not start when the building is finished. It starts when you are certified. The gap between those two dates is carried entirely by your working capital, and it is the single most common reason a well-built facility runs into trouble in year one.
Model that gap explicitly. A lender reading a skilled nursing plan that shows revenue beginning in the month the certificate of occupancy lands will discount the whole projection, and they will be right to.
If you are using 7(a) rather than 504
For a start-up the SOP requires:
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.
For a nursing home the phrase "all costs required to become operational" is unusually expensive, because becoming operational includes the pre-revenue period above: staffing up to the ratios your license requires before you have residents, the survey process, and the working capital that bridges to first reimbursement. Those are costs required to become operational on any ordinary reading, regardless of which pocket funds them. Lines of credit and 504 loans are the only stated exclusions.
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. The ranges in circulation are unusually unreliable for this sector for four reasons:
- Bed count drives everything, and published figures rarely normalize per bed.
- Licensure standards are state law. Room sizes, corridor widths, bathing facilities and staffing minimums vary, and they are 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 is usually omitted, which is precisely the cost that sinks new facilities.
What a lender will ask you for
- A project cost schedule covering all costs required to become operational, with the equity injection identified and its source documented.
- Monthly cash flow with an explicit, dated certification and census ramp. Not an annual summary.
- Payer mix assumptions with the reimbursement basis stated, and sensitivity on it.
- Evidence of the licensure path in your state, and of the CMS enrollment route if you will bill Medicare or Medicaid.
- Staffing model against the ratios your license requires, costed from the month you must hire rather than the month you open.
- Your 15% or 20% contribution planned for. The classification is settled, so there is nothing to argue, only to fund.
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. The entry "Nursing homes, including assisted living facilities" appears verbatim in the Limited or Special Purpose Property list in SOP 50 10 8.1.
How much equity do I need for an SBA 504 loan on a nursing home?
At least 15% if the business is established, and at least 20% if it is also a new business. The standard 10% structure is not available.
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. The notice is at 90 FR 55738, effective 1 January 2026. CMS resets the amount annually.
Does the $750 fee cover certification?
No. It is the enrollment application fee. Survey and certification is a separate process with its own timetable, and the period between completing the building and being certified is carried by your working capital.
Is assisted living treated the same way?
For the SBA equity rule, yes, because the list entry expressly includes assisted living facilities. For everything else, no. Assisted living is state-licensed, generally not Medicare-certified, and has a different cost and revenue model.
Am I a start-up if I already operate other facilities?
If the borrowing business has been generating revenue from intended operations for one year or less, yes. The SOP's test is the age of the business, not the experience of the operator.
This page summarizes what SBA SOP 50 10 8.1 says as at 1 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 policy is reissued regularly, CMS resets the application fee annually, 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.