Skilled Nursing Feasibility Study in Washington

Heavy concentration, small tickets

Washington skilled nursing lending has two features. Among states Washington is 4 of 48 for skilled nursing, and its location quotient of 2.13x means nursing facilities take more than twice their national share of Washington approvals, even though the class sits at 21 of 39 in the state's own mix. At the same time the loans are small: SBA approved 41 of them from FY2017 to FY2026, worth $27.1 million, and the median of $400,000 is 0.60x of that class median nationally. The middle band of Washington loans spans $50,000 to $983,000.

What the small loans imply

Skilled nursing facilities cost far more than these tickets, so the loans most likely fund equipment, working capital, partial acquisitions or improvements. Of the 41 loans, 40 are 7(a) and 1 is 504, and none is a franchise. Columbia Bank is the sole named lender, with 16 loans and $5.5 million. King County has 10 loans, Clark and Snohomish 7 each, and Pierce 6.

Calendar and cancellations

FY2018 had 8 loans and $4.1 million and FY2020 had just 1 loan of $1.3 million, while FY2025 recorded 7 loans and $2.8 million. Cancelled files make up at least 9.4% of approvals to FY2024, with the same ceiling. Washington nursing loans carry no printed loss rate: the early cohort is under 30 loans.

Testing a nursing facility proposal

A Washington study should begin with what the borrower is actually buying. If the project is a facility, the study must show census, payer mix and the reimbursement rates from Medicare and Medicaid, which dominate revenue in this sector, along with the staffing costs to meet minimum standards. If the project is smaller, such as equipment or an improvement, the study should show how it raises revenue or cuts cost. Licensing, certificate and bed capacity rules in the state decide what can be built, and occupancy has to be shown at a conservative level through a ramp. Coverage should include a case in which reimbursement tightens. The appraiser will value the going concern and the real estate separately, so documentation of the operator's survey history is part of the lender's view.

A coding limit

Inpatient hospice and assisted living with nursing sit in the same code as skilled nursing, so the cell cannot separate them.