6 Federal Capital Financing Programs for Hospitals
Hospitals in need of capital financing have several outlets within the federal government, and a new resource from the American Hospital Association gives an overview of each federal financing program.
Here are the six major federal capital financing programs hospitals can utilize:
1. Community Facilities Program. The CFP is within the U.S. Department of Agriculture and provides grants, direct loans and guaranteed loans through USDA-approved lenders. Public and non-profit hospitals in rural areas (population up to 20,000) are eligible, and direct loans usually range between $1 million and $3 million.
2. Business & Industry Guaranteed Loan Program. Also through the USDA, the BIGLP provides guaranteed loans through USDA-approved lenders for public, non-profit or for-profit hospitals in rural communities (population of up to 50,000).
3. Economic Development Administration Investment Programs. The Department of Commerce administers the EDA Investment Programs, which involve competitive grants. Public and private non-profit organizations are eligible for the grants, which are focused on job creation in addition to economic development.
4. Section 242 Mortgage Insurance. Acute-care hospitals (public, non-profit or private) are eligible for Section 242 Mortgage Insurance, which runs through the U.S. Department of Housing and Urban Development. This federal mortgage insurance applies to fixed-rate loans and is focused on the construction or rehabilitation of acute-care hospitals.
5. 504 Loan Program. The Small Business Administration offers for-profit hospitals with a net worth less than $15 million to finance fixed assets, such as land, buildings and equipment. The maximum loan amount is $5 million.
6. New Markets Tax Credit Program. The Department of the Treasury helps hospitals located in qualified low-income communities (greater than 20 percent poverty or less than 80 percent area median income) through the NMTC Program. Community development entities issue debt or equity investments and set the interest rate and term.
For more information and to access the websites of each individual program, click here.