Children's Care Home Finance & Loans
Find and secure the business funding you need for a children's care home.Speak to one of our experts020 4525 5312
Designed For Your Business
- Payments geared to your turnover
- Adverse Credit – no problem
- No Income Proof Required
- Repayment and interest-only available
Finance For Property
- Terms up to 20 years
- £50,000 – No Maximum
- Rates from 2% over base rate
- Up to 80% Loan to Value available
- Answers for all types of challenges
- Solutions tailored to your needs
- Arrangements tailored to your circumstances
- Assets, cashflow, growth capital
Financing a Children's Care Home
When children and young people need to live away from their families, they will usually stay with foster carers.
It is only when foster care is either not possible or not desirable that a children’s home may be essential - and providing the necessary facilities demands fundinga
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There is a growing demand for children’s social care services, with a record number of children coming into care, not least because of a rising child population. This demand is increasingly being met by the private sector, presenting an opportunity for building up a rewarding business.
About one in 10 children in care live in a residential children’s home. These children often have complex needs that require specialist care and support and a residential home is a better option for them. Residential care for children, or children's homes, exists to ensure that the needs of children are met when they cannot live with a family. They are a place for children to develop and grow, as well as provide food, shelter, space for play and a caring environment.
Small local authorities may not be able to operate suitable homes. An organisation such as a charity or a chain with a series of homes can get economies of scale in terms of management oversight, and quality assurance - most privately-run homes have a higher number of employees on duty in LA homes than those run by private organisations.
Children's care home requirements
Another reason might be about being able to meet the specific needs of children. Children with complex needs might need access to therapeutic care and require placements in homes that specialise in a certain type of care.
But of course, running a children’s home is not simply a business. Looking after young people who may have challenging behavioural or serious medical problems is a huge responsibility. It requires compassion, a professional caring approach and a genuine desire to help improve the care and life chances of vulnerable young people.
The challenges are considerable, but there are already more than 2000 registered children's homes in the UK and the number is growing. Of course, children’s home providers must meet the highest standards of professionalism and probity, and comply with extensive regulations.
All providers and managers of children’s homes must register with Ofsted, the Office for Standards in Education, Children’s Services and Skills. They inspect and regulate services that care for children and young people, as well as their better-known role in regulating services providing education and skills for learners of all ages.
They will inspect assess and approve children's homes. Examples of establishments that have to register with Ofsted children’s homes include:
- Homes for children who are looked after by a local authority either as a short-term measure or more long term
- Homes for disabled children and young people, including those with physical and learning disabilities
- Homes for children and young people who have emotional and/or behavioural difficulties
- Homes for children and young people who have a mental health condition
- Homes for children and young people who have a drug or alcohol addiction
- Secure children’s homes for children who have committed an offence or need the extra protection these homes give to secure their welfare
- Homes that provide care and accommodation for children who are 16 years and over in order to prepare them for independent living – these homes must register as children’s homes unless they provide only accommodation for children and not care
- Homes that provide short breaks
- Homes that are refuges
In addition to Ofsted, the Care Quality Commission (CQC) may be involved in some aspects of care home provision.
Your children’s home funding needs
A children’s home is not just a place for children and young people to stay. It needs to be a real home, where young people can help heal emotional and physical wounds and build foundations for a better tomorrow.
It means substantial challenges to those who run them - but while the challenges of providing care and the need to meet and exceed regulatory standards may present the greatest issues when setting up a care home business, there will still be practical and financial challenges to meet. You will need solutions to:
- Set up a new children’s home
- Buy an existing children’s home
- Acquire equipment and assets
- Provide working capital
- Support your cashflow
- Finance growth
- Deal with tax
- Deal with problems
Setting up a new children’s home
Starting a children’s home - for care sector first-time buyers - may require considerable investment. Unless you already have a suitable property, your first consideration is going to be finding the right premises.
In most cases, a large house may be the most suitable option, although if you are planning to set up a secure home you will need to pay particular consideration to the location and the perimeter of the properties you are considering.
Buying premises with a care home mortgage could give your home and your residents security, and help you secure a valuable asset for the future.
Commercial mortgages can help you spread the cost of acquiring a suitable property over 20 years or more. Setting up a care home may involve many other expenses, but with property being looked on positively by most lenders, it may be relatively easy to secure the mortgage you need. Remember though, as a new business you should still expect to provide a detailed business plan which will show how your home can generate sufficient profits to repay the children's care home finance.
Remember too that you will need a change of use planning permission from the local authority to turn a private residence into a care home. Getting the local authority on your side is vital to the success of your business plans.
The second barrier to starting up is dealing with the mountain of regulations and paperwork required.
The childcare sector is highly regulated. You will need to employ staff experienced in childcare and who meet all the necessary approvals for work with children and a Registered Manager who meets OFSTED requirements.
You will also be faced with significant set-up costs, for the recruitment of staff, training, establishing written procedures and satisfying the demands of the regulatory bodies.
At Rangewell we can help you find the lenders who are most likely to be receptive to your business plans.
Buying an existing children's home
Setting up your own children's home may be possible, but an alternative is to buy an existing home - especially if you already operate a children’s home business. This has an important advantage in that it will have staff and residents and will generate revenue from day one, providing a shortcut into profitability.
You may also find that it reduces your cost of borrowing as lenders are usually happier lending to an established business that can demonstrate viability with positive accounts over previous years. We can help you secure a number of solutions to let you buy into an established care home, based around secured lending, or a Commercial mortgage.
Funding equipment for your care home
Your care home will have a range of equipment needs. Durable domestic furniture may be preferred, to avoid giving an ‘institutional’ atmosphere to the home. You will also need business items such as a computer and printer.
Asset Finance lets you spread the cost of the equipment - or assets - you need. There are several types of Asset Finance:
Hire Purchase allows you to hire assets until you have paid for them - when they become yours. It can spread the cost of items such as seating and tables that you expect to give long service for the long term. HP agreements generally last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments. Furniture might be bought with hire purchase
Leasing operates like a rental agreement in that you pay a monthly charge to use the asset. You might choose to lease your IT equipment, which can provide the extra peace of mind that comes from knowing if something goes wrong, the lease company can be responsible for dealing with it.
Find out more about the Asset Funding solutions for your children’s home.
Staffing for your children’s home
It is up to you as a care homeowner to make sure that unsuitable and unskilled workers are not employed. All children’s homes should be staffed by well-trained, well-supported people who care about and want to work with children with complex needs. It is now recognised as highly desirable that staff working in care roles in children’s homes should be required to register with an independent body that oversees standards within the profession.
Residential staff frequently have to deal with incredibly difficult and challenging situations. They may be subject to physical violence, verbal abuse and may need to act quickly to prevent self-harm, assaults or damage to property. Children’s homes are currently competing with other low-paid, employers for untrained low paid staff which may be less stressful and have more regular hours. Where staff are not trained, supported or valued there are high levels of sickness, absence, staff turnover and difficulties with recruitment.
The costs of selecting and training staff who are able to provide a high-quality service may be high but also essential. It will increase the cost of running your home and may lead to difficulties with cash flow if you're not prepared.
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 problem has been dealt with.
Growth Finance for children’s homes
You will probably want to grow your children’s home operation to maximise the income it can offer and enjoy economies of scale. Large-scale finance can help you build an extension to provide more rooms, acquire a neighbouring building to use as an annexe, or even acquire another home to use as a branch operation, providing some economies of scale.
Growth Finance is designed to help, with loans designed to provide the cash to fund growth that can be repaid once that growth is making returns.
Lenders may require an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections. Find out more about Growth Finance for care homes.
Insurance for Professional Indemnity
Your professional indemnity insurance may be a major cost, particularly if you work in the corporate commercial sector where liabilities may potentially reach into the millions. There are a number of ways to provide for the costs. Contact us to find out more about cash flow solutions that could help.
Tax Loans for care homes
A large quarterly VAT or annual tax demand can cause problems with your cash flow, 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 you avoid 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 problems
To ensure care providers are meeting the required standards, the CQC inspects establishments at regular intervals. It sets high standards and bases its checks on five key service areas. These are safety, effectiveness, leadership, standards of care and responsiveness to residents’ needs.
Every CQC inspection results in one of four possible ratings: Outstanding, Good, Needs Improvement or, in the worst-case scenario, Inadequate. If it fails to meet the necessary standards, a children’s home may be put into special measures or even struck off the register.
A poor result in an inspection may have a considerable financial impact and require substantial investment in training or facilities to overcome. At Rangewell, we know the solutions which can help your care home business deal with challenges.
Contact our team to find out more about finance for children’s homes facing reputational or financial difficulties.
How we help you capitalise your care home
Your care home may present a number of funding needs. At Rangewell, we aim to provide an individual approach and the solutions you need. We use our expertise to find the most competitive deal for all types of finance, including Professional Loans, Unsecured and Secured Loans. As well to conventional loan products, we can help you find Alternative Funding, using new loan providers and innovative funding solutions.
Whether your care home plans need a simple quick solution, or a complicated ‘Jigsaw’ funding plan made up of a combination of products for the long term, we can work with you to find the answers. From funding a children's care home to finance for elderly care homes, call us now to get our experts working for your care home funding needs.
Last update: 21 September 2023
Download Rangewell’s free and detailed guide to Finance for your Care Home
What types of finance are available to Care Homes and business providing residential care?
What is Asset Finance - and how it gives you a business advantage
Can finance help me increase the number of care home places my property offers?
Why not all providers are equal - finding the one that’s right for you
How we can help you pay less than 0%
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