Care Home Mortgages

But of course, running a care home is not simply a business. Looking after people at the end of their lives is a huge responsibility and requires compassion, a professional caring approach and a genuine desire to enhance the lives of your residents. 

What’s more, care home providers must demonstrate compliance with extensive and rigorous regulations to register and operate their care business.

In England, it is the Care Quality Commission (CQC) which acts as the independent regulator of the sector and ensures minimum quality and safety standards are met.

The CQC has detailed regulations for care home owners, including the need to employ suitably qualified and competent staff and the need for the premises to meet stringent health and safety standards, as well as requirements for the safeguarding and treatment of residents. It inspects care homes at regular intervals and care homes may be put into special measures, or even struck off the register if they fail to meet the necessary care standards.

If you are wanting to buy a care home, you will need to make an application to register with CQC as the ‘care provider’. You may also need to appoint a registered care home manager who will take everyday responsibility.

Meeting standards is essential and makes good business sense. The best solution to build a profitable business is to provide a high standard of care - which will help ensure full occupancy and hence maximise profits.

At Rangewell, we work with all kinds of care homes across the UK and all types of care homes finance, finance for children's care homes, finance for vulnerable adult care and more.

It means we know the challenges you face at all stages of setting up and running your home - and we know the financial solutions to them too.

Your care home funding needs

As a care home operator, you may need to find the right type of funding to help you when you are ready to:

• Set up a new care home
• Buy an existing care home
• Acquire equipment and assets
• Provide working capital
• Support your cashflow 
• Finance growth 
• Deal with tax
• Deal with problems

Setting up a new care home

Starting a care home business may well be an expensive venture. Unless you already have suitable property - a very large residential house or hotel premises - your primary consideration is going to be finding a suitable building.

The location can be crucial. While many residents might want a picturesque location, there are also practical considerations. Many relatives of residents will be elderly themselves and need to use public transport or to travel only a short distance to visit. So a town might be best, rather than a country location with marvellous views. It is also essential to choose a location where you can find staff. You will need to employ unskilled people, who will not want to travel too far to work as it will not be economic for them to do so.

Size is also important. For a care home to prove profitable you will need to ensure you can provide care for a minimum of 25 residents.

Buying premises with a care home mortgage could give your business and 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 - although as a new business you should still expect to provide a detailed business plan which will show how your business can generate sufficient profits to repay the loan.

Remember, you will need change-of-use planning permission from the local authority to turn a private residence into a care home.

At Rangewell we can help you with the application and find the lenders who are most likely to be receptive to your business plans.

Buying an existing care home

Setting up your own care home may be possible, but an alternative is to buy an existing home.

This has an important advantage in that it will come ready to work and with residents who will generate revenue from day one, providing a shortcut into profits. The costs involved may depend on the current turnover of the home and its potential for the future.

You may also find that it reduces the cost of borrowing - 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. You can find more information in our how to buy a care home and how to get funding for your care home guides.

Funding equipment for your care home

Your care home will have a wide range of equipment needs. Some residents may bring their own furniture if your service is purely residential but, if you provide nursing care, you will be faced with a long list of medical equipment, from beds and wheelchairs to hoists, to provide medical beds, wheelchairs and lifting equipment. Other items may be needed according to the severity of the impairments that your residents exhibit.

You will need to fit out a kitchen capable of producing large numbers of meals, as well as business items such as a computer and printer.

There are several types of Asset Finance.

Hire Purchase Finance

Hire Purchase allows you to hire assets until you have paid for them, at which point 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. A medical bed might be a good purchase using Hire Purchase.

Leasing Finance

Leasing operates like a rental agreement. You pay a monthly charge to use the asset. It’s common for things such as large screens and refrigeration equipment which will have a limited life – it means you can easily update your equipment when you need to because of a change in plans or a better solution coming on the market. 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.

Cashflow Finance for care homes

Cashflow is a challenge for any business. If you are faced with a large number of big costs simultaneously, you could find that your cash flow has become negative - and that you need external funding to keep your care home open.

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 care homes

You will probably want to grow your care 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 acquiring a competitor. 

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 need you to show an established trading history and record of profits, but it may still be possible to arrange Growth Finance based on your profit projections.

Insurance for Professional Indemnity

Your professional indemnity insurance may be a major cost, particularly if you provide medical, as well as residential, services. There are a number of ways to provide for the cost of the cover you need. Find out more about solutions for professional indemnity.

Tax Loans for care homes

A large quarterly VAT or annual tax demand can cause serious problems for your business' cash flow, especially 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

Even the best-run business can run into financial difficulties. At Rangewell, we know the solutions which can help your care home business deal with challenges. We can even provide financial solutions if you have a damaged credit history or CCjs, which are considered red flags by most lenders.

Find out more about how we can help businesses with bad credit ratings.

How we can 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 as the more conventional loan products, we can also help you find newer Alternative Funding products, using new loan providers and innovative funding solutions.

Whether your care home plans need a simple quick solution, or a more complicated ‘Jigsaw’ Funding plan made up of a combination of products for the long-term, we can work with you to find the answers.

Call us now to get our care home funding experts working for you for any type of Care Home Finance you need. You can also find additional business support for care homes with our care home hub.