Federal Capital Financing Programs for Hospitals

There are 6 major programs in the federal government to assist hospitals in their capital financing needs.  This site names each program, its focus, the types of financing available, and eligibility requirements.  Links to each program's website and other capital financing information resources are provided for more information. 

PRELIMINARY BACKGROUND ON FEDERAL CAPITAL PROGRAMS

 Program

 Department

Office 

 Focus

 Type of Financing

 Size
Limits

 Eligibility

Community
Facilities
Program
 Agriculture
(USDA)
Rural
Development
Develop essential community facilities in rural areas Grants, direct loans, and guaranteed loans through USDA-approved lenders. Up to 90% loan guarantee
Direct loans typically $1-3 million
Max Term 40 years
 None Public entities and not-for-profit corporations in rural areas and towns up to 20,000 in population. Includes health care, public safety, education, other community needs. Direct loans and grants are competitive within state regions.

Security requirements: bonds, pledge of tax receipts, assessments, revenues, or real estate mortgage

Business & Industry (B&I)
Guaranteed Loan Program
Agriculture
(USDA)
Rural
Development
Business
development and job creation
in rural areas
Guaranteed loans through USDA-approved lenders. Guarantee amount varies from 80% for loans under $5 million to 60% for loans exceeding $10 million. 
Max term 30 years
$10
million,
exceptions
up to $25
million
Public, not-for-profit, or private entities in rural areas and towns up to 50,000 in population

Security requirements: acceptable collateral

EDA
Investment
Programs
 Commerce Economic Development Administration Economic development and job creation
Competitive grants  Varies Districts Organizations, units of State and local government, Indian Tribes, institutions of higher education, public or private nonprofit organizations cooperating government
Section 242
Mortgage
Insurance
 Housing and
Urban
Development
(HUD)
Office of
Healthcare
Programs
Construction, rehabilitation of acute care hospitals

Federal mortgage insurance on fixed-rate loan
from HUD approved private lender 99% loan guarantee 
Max term 25 years
 None Acute care hospitals (public, not-for-profit, or private)

Security requirements: first mortgage of building and equipment

504 Loan
Program
Small Business
Administration
(SBA)
504 Program Branch, Office of Financial
Assistance
Economic
Development
and job
creation/
retention
Certified Development Company (CDC) funded
with SBA-guaranteed debenture provides up to
40% of project cost
A participating lender contributes up to 50% of
project cost
Max term 20 years
Up to $5
million
Business must operate for profit and fall within SBA size standards (net worth less than $15 million)
Finance fixed assets including land, buildings, and equipment

Security requirements: lien on project assets, personal guaranties from owners of 20% or more

New Markets
Tax Credit
(NMTC)
Program
 Treasury Community
Development
Financial
Institutions
Fund
Business and real estate
investment in low-income
communities
Debt or equity investments through Community Development Entities (CDE)
Interest rate and term set by the CDE
 None Must be located in a qualified Low-Income Community
(greater than 20% poverty or less than 80% Area Median
Income) or serve a Targeted Population (Low-Income)

Security requirements: determined by the CDE


 ADDITIONAL INFORMATION


Federal programs:

Rural health and capital access:

 

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