Finance for Care Home Agencies

Funding a care home agency is a vital part of providing the best possible service to clients. You need to ensure your agency is both compliant and profitable. By understanding your financial outlook and writing a business plan, you can plan for success. 

Whether you are running a care home or starting a home-based care agency, you'll need a finance partner that understands your challenges and needs. 

At-home support, which may be referred to as home care, domiciliary care or home help, can be tailored to the needs of the individual, from a daily 30-minute visit through to full round-the-clock live-in care.

As a care agency, you may deliver care plans providing care to vulnerable people, and companionship to those living with dementia, Alzheimer’s or disabled and elderly people. You may also include specialist support with continence care, ventilators and PEG-gastrostomy.

So, whether you are starting a new agency or growing an existing operation, we can help find the right finance to drive growth for your business. Keep reading to learn more about care home agencies, or get in touch with Rangewell to start your loan application today.

Considerations for care home agencies

The population is ageing and, as a result, so has the demand for elderly support services. Thanks to leaps forward in medicine, more people are able to stay in their homes for longer. This means that there’s plenty of opportunity for new agencies specialising in offering care to elderly people.

Of course, setting up and running an elderly care agency will present challenges. You will need to find reliable, qualified care staff who can work in your geographical area. You will need to support those staff and assign them to suitable clients - from those who simply require basic care and help every day to those with specific medical problems which require real nursing skills.

To ensure that your home care agency is successful, you will need plenty of experience in the care sector, the ability to manage a team, and a commitment to providing high-quality, compassionate care. You will also need to take care of the administration of the business - ensuring that payments are made and staff paid. 

You may also need to be able to call in specialist support, from handypersons, cleaners and gardeners to solicitors at short notice.

You will need qualifications before you can provide this type of business: 

• A QCF Level 5 Diploma in Leadership for Health and Social Care, or
• A Registered Managers Award (RMA), or
• An NVQ Level 4 in Leadership and Management for Care Services

These may need to be supported with a nursing or social care qualification. The care staff you provide must also have completed what’s known as common inductions standards (CIS) training. 

You and your business will also need to register and be assessed and approved by:

• The Care Quality Commission (CQC) if you’re based in England
• The Care Inspectorate if you’re based in Scotland
• The CSSIW if you’re based in Wales

Of course, as with any business, you will also need adequate finance. The costs may appear to be modest, but you must be able to pay staff and for the costs of registration and compliance with legislation. You will also need to invest in setting up and promoting your business, and providing working capital while you build up a list of clients you will be serving.

At Rangewell, we have experts in funding for the care sector and can help you secure the funding you will need. You can find out more information in our how to get funding for your care home guide.

Starting up your elderly care agency

It is possible to start your care agency from your home. This type of start-up will avoid the need to pay for office space. As you will be managing carers remotely, you could argue that you do not need dedicated premises - although many successful care agencies are now taking shop premises which will serve as offices - helping them bring in business and employment enquiries, and creating a more legitimate and established presentation for the agency.

Whatever the scale of your start-up, you will need to meet a number of legislative requirements. 

Every care agency must have a registered manager who will take responsibility for aspects of the business. You will also need to register with the CQC (in England), The Care Inspectorate if you’re based in Scotland or the CSSIW if you’re based in Wales. 

This is a fairly long process involving a number of checks and a registration fee.  

You will then need to find qualified and reliable care workers. This may be an ongoing need. Not only will you need more staff as your business develops and you serve more people, but staff turnover may also be high.

All staff must:

• Pass a DBS check 
• Complete CIS training and gain a Care Certificate

You’ll need to pay for any training they need to advance their skills. You will probably also need to accompany them as they go out on care visits until you’re confident in their abilities.

You may, therefore, require a vehicle.

You will also need to market your new business. This might be done by word of mouth, but you may need to invest in a website to ensure that you can present a professional appearance for your agency.

You may also need working finance for the first weeks and months while you work hard to establish your business and build up your client list.

Your funding requirements may be surprisingly large for care sector first-time buyers. You may need to draw up a detailed business plan to see all the costs you need to cover while your agency finds its feet and becomes profitable.

Finding funding to start up any business can be difficult. You will need to invest some funds of your own to prove your commitment, but even so, lenders prefer to lend to businesses with a proven track record, which they see as a better risk than start-ups.

This is true in many sectors - not just elderly care agencies. Fortunately, at Rangewell we know the lenders who may be prepared to support start-ups, and who may have an understanding of the value of care businesses and the challenges involved in setting up in the care sector.

Buy an existing home care business

A possible alternative to starting up may well be to buy an existing home care business. You will still have to go through all the checks and regulatory hurdles of setting up, but buying an existing business has two important advantages:

1. You will have a reliable income stream from existing clients. This means that your investment in your agency will generate revenue from day one.
2. Because they can see evidence of profits in the form of previous years' accounts, lenders will be able to take a more positive view of your prospects. The lending you need may cost less and be easier to arrange. 

The costs involved may depend on the current turnover of the business and the assets it holds. Whether it operates out of its own premises, and how prestigious those premises are, may be important. Also important will be the size of its client base, whether or not it has local authority contracts and its potential for the future. 

You will need to look closely at the potential of any new business you are considering buying, and conduct due diligence. We can help you secure a number of solutions to let you buy into an established domiciliary care business.  

Funding equipment for your elderly care agency

Your elderly care business might present relatively few equipment needs. Most clients will have the necessary items in their homes. However, in rural areas, you might need to provide transport if they do not have vehicles of their own. 

You will definitely need to supply your staff with photographic ID badges and you may want to provide them with uniforms. It’s also a good idea to provide any necessary protective clothing such as aprons or disposable gloves.

Asset Finance lets you spread the cost of the equipment - or assets - you may need. There are several types of Asset Finance, including Hire Purchase and Leasing.

Hire Purchase allows you to hire assets until you have paid for them when they become yours. HP agreements generally last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments. 

Leasing operates like a rental agreement. You pay a monthly charge to use the asset. 

Contract Hire can reduce the cost of providing vehicles.

Cash flow finance for care providers

Cash flow is a challenge for any business. If you are faced with a large number of large costs simultaneously, you could find that your cash flow has become negative - and that you need external funding to pay the wages of your staff.

Cashflow support and Working Capital Finance can provide cash to deal with large costs and overheads, and keep your cash flow positive. It is usually designed to be repaid in the short- to medium-term, once the cashflow shortfall itself has been dealt with. 

If you are dealing with local authority payments as part of your income stream, you may face problems if you have a local authority that is slow in paying. Invoice Finance - which will allow a lender to make a cash advance as soon as you issue an invoice for services completed could provide a cash flow lifeline in these cases.

Find out more about cash flow finance solutions for elderly care agencies.

Insurance for your elderly care agency

You and your staff will be responsible for your clients’ well-being. Your staff will be coming into close contact with them in their homes and will take care of administering medications and treatments. The possibilities for serious injury or damage - or worse - may be high, as will the penalties if you or your staff are found to be responsible.

It means that your agency must have insurance cover against a number of potential liabilities and legal claims.

As a minimum you will need need to arrange:

• Employers’ liability insurance - to protect your business against claims from staff who are injured or harmed at work. Lifting elderly patients is a serious risk for carers, and can result in back injuries which may be judged to be the responsibility of your agency
• Public liability insurance - to deal with claims made by clients and their families for injury or damage. Accidents which result in damage to the client's home may require costly repairs and replacements
• Professional indemnity insurance - to protect your business if you make decisions that result in loss, damage or harm
• Medical malpractice cover and treatments liability insurance - to deal with issues relating to giving medication

Rather than buying these covers separately, you may be able to find an insurance package specifically tailored for your agency from a broker familiar with the sector. While this may provide a full range of cover and may reduce costs, the premium is still likely to be high. At Rangewell, we can find solutions that will let you spread the cost of the cover you need.

Tax loans for elderly care agencies

A large quarterly VAT or annual tax demand can cause problems with the cash flow of your elderly care agency, particularly when it falls at the same time as other costs. Tax loans help you spread the cost of your tax demands into affordable monthly payments. They mean that your care home business can have:

• Better control of cash flow
• Fixed monthly payments
• Quick and simple to arrange

It can also ensure that your business avoids late payment issues with HMRC, with the potential penalties and reputational damage that can follow.

See how a tax loan can mean better control of cash flow for care homes.

Dealing with financial problems

Even the best-run business can run into financial difficulties. A sudden loss of clients or the withdrawal of local authority funding could trigger a crisis. At Rangewell, we know the solutions which can help your elderly care business.

So, even if you face serious issues such as a negative assessment from the CQC, we can work with you to find the financial answers you need to turn things around.

We even provide financial solutions if you have a damaged credit history or CCjs, which are considered red flags by most lenders, using our knowledge of the entire UK lending market.

Find out more about finance for care agencies.

Funding your elderly care business

Like any business, your home care business will present a series of funding needs. 

At Rangewell, we want to work with you and your agency for the long term, finding you the most appropriate answers, and the most competitive deal for all types of finance as each one comes along.

We can provide answers for all types of business lending, from simple loans and equipment finance to solutions when you face particular challenges - for all your care home finance needs.

Whether you need a simple and quick solution or want to talk about a long-term programme of financial support, from elderly care homes to funding for supported living businesses, we can work with you to find the answers.

Call us now to get our home care funding experts working for you. You can also get additional, specialised business support for care homes with our care home finance hub.