Most SNF Refinancing Deals Die in the Due Diligence Room

Not because the facility is a bad investment — but because the operator walked in unprepared.

Lenders financing skilled nursing facilities (SNFs) operate in a high-scrutiny environment. Between CMS oversight, reimbursement complexity, staffing mandates, and post-COVID occupancy recovery, underwriters are asking harder questions than ever. If your documentation isn’t airtight before you sit down at the table, you risk a longer process, a worse rate, or a dead deal.

The good news: most of these issues are fixable — if you catch them early enough.

At QuickEdge CPA, we work exclusively with post-acute and long-term care operators. We’ve helped dozens of SNF owners get their financial house in order before approaching lenders, and we’ve seen firsthand what separates a smooth close from a frustrating stall.

This post outlines the five critical areas lenders scrutinize — and at the bottom, you can download our free Pre-Refinancing Checklist PDF to work through every line item before your first lender call.

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1. Financial Documentation: Your Story in Numbers

Lenders want to see at minimum three years of audited financial statements, plus a current year-to-date P&L. But it’s not just about having the documents — it’s about what they show.

Key red flags underwriters look for:

– Declining EBITDAR over consecutive years – Revenue concentration in Medicaid without a managed care strategy – Accounts receivable days over 60 (or aging reports showing heavy 90+ day balances) – Unexplained swings in expenses or management fees paid to related parties

What you should do before refinancing: Run a clean-up pass on your books with your CPA. Identify any non-recurring expenses that can be properly addback’d to normalize EBITDAR. Make sure your payor mix is clearly documented and your AR aging reflects active collection efforts.

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2. Operational Metrics: Lenders Read Your Quality Scores

This surprises some operators — but experienced SNF lenders review your CMS Care Compare profile before they review your tax return.

They’re looking at:

– Overall star rating (below 2 stars raises immediate flags) – Staffing star rating (post-PDPM, this is weighted heavily) – Health inspection history — specifically the number and severity of deficiencies – Occupancy trends — are you recovering post-COVID, plateauing, or declining?

A facility with a 4-star rating and 85% occupancy will command far better terms than a 2-star facility at 78%, even if the EBITDAR looks similar on paper. Quality metrics affect both loan approval probability and your cap rate.

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3. Legal & Compliance: No Surprises Allowed

Lenders doing their due diligence will run a full background check on your licensure, certifications, and litigation history. Surprises here are deal-killers.

Before refinancing, you need to have clean documentation of:

– Current state licensure (no pending renewals or conditional status) – Active Medicare and Medicaid certification (including any recent provider agreements) – Compliance program documentation — policies, training logs, incident reports – Outstanding litigation or regulatory actions — disclose proactively with counsel involved

If you have a past survey deficiency or a resolved legal matter, that’s usually fine — but undisclosed issues discovered during underwriting destroy trust quickly.

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4. Property & Debt Structure: Know What You Own and What You Owe

Lenders need a clear picture of both the physical asset and the existing debt stack.

On the property side, have ready:

– A property appraisal within the last 12 months (HUD/FHA lenders require a FIRREA-compliant appraisal) – Phase I environmental assessment – Capital improvement log for the last 5 years – Deferred maintenance schedule with estimated costs

On the debt side, pull together your current loan statements, confirm any prepayment penalties or yield maintenance provisions, and document all escrow balances. If there’s any subordinate financing — seller notes, SBA loans, related-party debt — disclose it upfront.

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5. Ownership & Corporate Structure: Clean is Fast

Complex ownership structures slow down closings. Before you go to market, make sure you have:

– An updated organizational chart reflecting all entities, members, and ownership percentages – Current operating agreements for all LLCs in the structure – Personal financial statements for all guarantors (lenders typically require a minimum net worth) – Three years of personal and business tax returns

If any entity in the structure has changed names, been dissolved, or has a federal tax lien — get ahead of it. These surface during title searches and underwriting.

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Get the Full Checklist — Free

The five areas above are the framework. But the details are where deals get done or fall apart.

We’ve compiled every specific document and data point lenders ask for into a one-page Pre-Refinancing Checklist for SNF Operators — organized by category so you can work through it with your team before your first lender conversation.

Enter your email below and we’ll send it directly to your inbox.

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Working With QuickEdge CPA

QuickEdge CPA provides accounting, tax, and advisory services exclusively for post-acute and long-term care operators. We understand SNF financials, reimbursement structures, and what lenders expect — because we work in this space every day.

If you’re considering refinancing and want a pre-lender financial review, reach out to our team. We’ll help you identify issues before a lender does — and put your best numbers forward.

[Schedule a free 30-minute consultation →](https://quickedgecpa.com/contact)