Federal Capital Financing
There are six 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) 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 Security requirements: determined by the CDE |
Additional Information
Federal programs:
Rural health and capital access:
- HRSA Office of Rural Health Policy
- Rural Health Research Gateway, Capital Funding
- Rural Assistance Center, Capital Funding
- National Rural Health Resource Center (search "capital access"):
- HUD Rural and Economic Deve!opment Gateway
- National Center for Rural Health Works (analyze health care and rural economic impact)
- State Health Facilities Finance Authorities