It’s no secret that the COVID-19 pandemic had a severe effect on small businesses nationwide, and senior living providers were no exception. Based on a recent estimate by Argentum, assisted living communities lost approximately $30 billion during the pandemic due to a combination of lower occupancy rates, staff shortages and increased expenses.
With these challenges plaguing senior living communities, operators are forced to look elsewhere for the funds to keep their business viable. According to the Small Business Credit Survey conducted in September and October 2020, approximately 91% of small businesses applied for the initial rounds of emergency federal funding that year such as the Paycheck Protection Program and Economic Injury Disaster Loan. Although many senior housing providers were among those able to take advantage of this aid, PPP ended in mid-2021 and EIDL funds ended in December 2021.
To best ensure their business’s success and sustainability in 2022, providers will need to seek every opportunity possible to maximize financial assistance and relief. Here are some of the options available for senior housing providers looking to revitalize their business in the new year and beyond.
Work with a financial partner
For many small housing providers, the pandemic continues to take a toll, despite many state and local governments loosening health and safety restrictions. As a necessary first step, those businesses will need to work closely with their bank/lender to see what options are available for additional relief. Those financial partners can explore debt relief options — or different state programs that may be available for additional support.
Explore local options to maximize assistance
If a senior housing provider only needs a small amount of capital to bridge the gap between its current funds and its needs, then it can consider talking with local organizations such as a Small Business Development Center or Chamber of Commerce to explore what options and partners they may have available. Those options may include loans for working capital, or even microloans to be used for a variety of needs, including repairs, supplies or improved health and safety measures at their facilities. Additionally, the Small Business Administration has several solid financing options when taken out with an approved lender, providing further protection for small businesses.
Recapitalize the business
It may be possible for senior living providers to work with their bank on ways to revitalize their cash flow. Although many types of assistance available may be available, one option for businesses with existing debt to consider is consolidating or refinancing their loans. Consolidation or refinancing can result in a lower interest rate and potentially lower payments.
Regardless of the assistance chosen, it’s important for business owners to consult with their banking or lending partners first to explore and ensure that those options will benefit them in the long run. Debt assistance and relief programs can be highly beneficial for the future health and growth of senior housing businesses. It’s also important to consider streamlining existing business operations alongside those measures, to strengthen their impact (with the added benefit of reducing unnecessary expenses).
Examining operations and finances now can not only help sustain business through the pandemic, but also prepare for the future. Using these options and working with an experienced financial partner to help senior housing providers navigate their complexities will help businesses build themselves back up and will go a long way to ensuring their long-term growth.
Jeff Nager is executive vice president, head of commercial lending, at The Bancorp Bank.
The opinions expressed in each McKnight’s Senior Living marketplace column are those of the author and are not necessarily those of McKnight’s Senior Living.
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