Refinancing To New £7m Loan For Supported Living Provider

Care businesses need to own or lease property to operate from, which means they usually have two different types of valuation: the value of their owned property and of the business itself. The property value is tangible and fixed, whereas the business value is generally an estimate based on financial projections. 

For care providers who typically have multiple occupants in a single premises, the value of their business tends to quickly exceed the bricks-and-mortar value of property. Finding a lender willing to loan against this value means being able to raise far greater amounts and have more control over your future growth. 

The value of your business is only one consideration, however. Lenders will also scrutinise your background, experience and most crucially, any existing borrowing before making a decision.

Recently we worked with a supported living provider that had taken out an expensive development loan to complete a new 18-unit care home. Upon completion, monthly repayments were restricting cashflow and preventing growth. The group approached Rangewell to see how we could help them address this loan AND raise greater amounts based on their group’s value rather than the property itself. 

Why was there a problem?

The client had already completed an expensive property development project, financed using a development loan totalling £4.6m. The project involved converting a commercial building into an 18-unit specialist care facility, which offered attractive potential profits based on the client’s own experience in the care sector and the high quality of the finished units. 

However, upon completion of the project, the client recognised a need for further finance to help grow the business at the best possible pace. They wanted to invest in new equipment, diversify sales and marketing and even explore a new development. None of this was possible unless they could find a lender willing to offer finance. 

Unfortunately, most lenders were unwilling to help due to the client’s pre-existing loan and the relatively low value of the finished property, which was far less than the £16m valuation for the business itself. 

Why we were able to help

We helped the client better define what they needed from a lender and established that the total amount of borrowing required was approximately £7m. This was split between paying off the existing loan of £3.6m and raising a further £3.4m to fund a new project as the provider continued growing. 

We identified a lender that was willing to refinance the client’s existing loan and make an offer based on the value of the business itself rather than the property. This meant the client could borrow against a £16m valuation, giving them far more flexibility in how much credit they applied for and how they wanted to repay it. 

Locked in a loan? Raise further funding with Rangewell

Don’t let an existing loan stop you from pursuing growth. Raise further finance and work with a lender willing to use your business value as the basis for their offer. Get in touch to learn more.