Community Health Center & FQHC Financing: A Guide for Executives

Reasons Community Health Centers Seek Financing

Community health centers and Federally Qualified Health Centers (FQHCs) pursue capital to support long-term sustainability and growth:

• Facility acquisition: Moving from leased to owned space can stabilize operations and control long-term costs while enabling tailored clinical layouts. 
• Refinancing existing debt: Replacing high-interest or short-term obligations with affordable, fixed-rate loans improves cash flow and balance sheet strength, which supports clinical staffing and services. 
• Expansion to meet demand: Data is showing growing demand for affordable primary care services at community health centers, driving the need for more space and equipment.
• Upgrades and modernization. Investments in technology, diagnostic equipment, and infrastructure help maintain quality and comply with the evolving standards of the Health Resources & Services Administration Health Center Program.

What Lenders Consider in Community Health Center & FQHC Financing

When evaluating community health center loan eligibility, lenders consider a combination of financial, operational, and governance indicators. These factors help determine repayment capacity and long-term sustainability:

• Reimbursement stability and payer mix: A balanced revenue stream across Medicaid, Medicare, commercial insurance, and self-pay patients reduces reliance on a single funding source. Centers with various payer mixes demonstrate resilience against reimbursement changes or policy shifts.
• Operating margins and Debt Service Coverage Ratio (DSCR): Positive operating margins and a DSCR above 1.2x indicate that a health center generates sufficient cash flow to cover debt obligations. Sustained margins signal operational efficiency and careful fiscal management.
• Audited financials: Clean, timely audits show that financial practices are transparent and compliant with generally accepted accounting principles (GAAP). They provide lenders with assurance that management systems are reliable and funds are tracked accurately.
• Patient utilization trends: Stable or growing visit volumes demonstrate demand for services and predictable per-visit revenue. This metric is particularly important as community health centers often operate on thin margins, and utilization drives sustainability.
• Governance and leadership: Strong boards and executive teams reinforce continuity and accountability. For FQHCs, governance structures must align with Health Resources & Services Administration (HRSA) requirements, including patient representation on boards, which assures lenders that the organization is both compliant and community-centered.

How to Qualify for Community Health Center Financing

Executives can take practical steps to present a stronger case to lenders:

• Maintain three years of audited financial statements with consistent monthly reporting so trends are clear. 
• Track DSCR, days cash on hand, and operating margins to show resilience under different reimbursement or volume scenarios. 
• Document utilization and reimbursement by payer to demonstrate reliable, diversified revenue streams. 
• Demonstrate governance capacity with an active, skilled board aligned to HRSA compliance expectations.
• Use capital planning best practices to avoid late-stage scope changes and cost overruns. 

Financing Structures for Community Health Centers & FQHCs

Community health centers and FQHCs and look-alikes typically use several financing options, depending on goals and project type:

• Acquisition loans: Long-term loans to acquire a clinic site or building, moving from lease to ownership and stabilizing facility control. 
• Construction financing: Project financing for new facilities, expansions, or major renovations, often scheduled to milestones and draws. 
• Equipment financing: Loans for clinical, diagnostic, IT, and facility systems needed to operate or modernize a site, aligned to useful life and reimbursement strategy. 
• Working capital: Liquidity to manage timing gaps in reimbursements, ramp up new service lines, or bridge operating needs during project execution. 

Preparing for Community Health Center Financing

To ensure a smooth process, financing should be approached as a managed project with clear milestones. Best practices include:

• Start early: Begin lender conversations at least 12 to 18 months before a lease expiration, major refinance, or planned expansion. Early planning gives executives time to gather documentation, align stakeholders, and respond to lender diligence requirements.
• Engage governance and advisors: Boards, external advisors, and project teams should be aligned on scope, costs, and timelines. Early approvals reduce bottlenecks and provide lenders with confidence in leadership capacity.
• Anticipate diligence: Lenders typically require financial projections, appraisals, site visits, environmental assessments, insurance verification, and HRSA compliance documentation. Preparing these in advance streamlines underwriting and avoids last-minute delays.
• Align financing with project milestones: Construction timelines, equipment purchases, and hiring plans should be mapped to loan covenants and repayment schedules to preserve cash flow and ensure compliance.

How Capital Impact Partners Supports Health Center Financing

Because we understand what lenders evaluate and how executives can strengthen loan eligibility, Capital Impact Partners structures health care facility financing to help community health centers and Federally Qualified Health Centers (FQHCs) put their best case forward to us. For more than 20 years, we have partnered with health centers nationwide, tailoring loan products to meet facility needs while reinforcing long-term financial sustainability and community impact.

We provide:

• Community health center loans for acquisition, refinancing, and expansion.
• Experience with various health center models, including FQHCs and look-alikes of varying sizes and structures.
• Mission-driven partnerships that go beyond underwriting, with loan structures aligned to both organizational goals and patient outcomes.
• Flexibility in structuring health care facility financing, supporting projects from permanent facilities to renovations and expansions.

One example is Altura Centers for Health’s Cartmill Clinic in Tulare County, California. In 2022, Capital Impact Partners collaborated with LISC to provide a $15 million loan that financed a three-building medical complex. The project expanded pediatric, OB-GYN, and optometry services, enabling more than 4,000 additional patient visits annually. By consolidating services into a modern facility, the Cartmill Clinic improved access to care, strengthened operational efficiency, and reinforced Altura’s role as a trusted community health provider.