SBA 7(a) Skilled Nursing Feasibility Study in Michigan

Fourth in the nation, 23rd at home, and two equal holders

Michigan stands fourth on loan count for skilled nursing under 7(a), though the class takes only place 23 of 39 in Michigan's own mix. The 33 loans total $39.1 million, with a midpoint of $525,000, 1.05x the national 7(a) midpoint for skilled nursing, and a middle half spanning $100,000 to $1.9 million. Franchised loans are 3.0%. Two holders tie at 11 loans each: ChoiceOne Bank, with $13.7 million, and The Huntington National Bank, with $3.8 million, books that differ greatly in size of ticket.

Counties and timing

Oakland County leads with 13 loans, Saginaw has 7, and Genesee and Missaukee 2 each, so the book is concentrated in the Detroit suburbs and the Saginaw area. FY2023 is the busiest year at 9 loans and $5.0 million, and FY2019 had just 1. The holders shown are as SBA lists them today.

What the code covers

Inpatient hospice and assisted living with nursing cannot be separated from skilled nursing, since one industry code also holds them, so some of these loans may finance a hospice facility or a care home that provides nursing, not only a nursing home. In Michigan the failed-to-fund share and the loss share are both absent: each cohort was under SBA's minimum, and the blanks tell a lender nothing.

What a Michigan skilled nursing study has to test

Skilled nursing is regulated and reimbursed, so the study must begin there. It should show the licensed beds and any approval process, the occupancy of existing facilities in the county, and the payer mix between public programs and private pay, since reimbursement rates decide revenue. Labor is both the largest cost and the largest exposure: show nursing wages, agency use and the plan to hire. A loan range from $100,000 to $1.9 million covers everything from an equipment purchase to an acquisition, so the study must say what is financed. Coverage should be tested with lower occupancy and a change in reimbursement. A nursing facility's value depends on its license and operator, so the appraisal should show what the building would bring without them.