How To Finance A Healthcare Business

By Rose Brown
Content writer
Published: 29 May 20231 minute read
How To Finance A Healthcare Business

Get the finance you need to build, expand or upgrade your healthcare organisation

The healthcare sector faces continual demands for better patient care and faster services, which in turn necessitate improvements in healthcare businesses. To meet this rising challenge, medical businesses must raise finance to fund expansion, upgrades and growth.

Table of Contents

The UK’s healthcare sector offers a wide range of opportunities for ambitious owners to grow their businesses, increase profits and provide a better standard of care. Across public, private and semi-private institutions such as hospitals, GP surgeries, dental surgeries and opticians, success depends on strong performance, compliance with UK-wide regulations and high patient satisfaction. 

To achieve these things, healthcare businesses face rising costs. Some of these costs, like energy, are shared across other commercial sectors – but healthcare, in particular, has unique challenges due to highly specialised equipment, skilled staff who command high salaries and heavy fines and repercussions for breaches in care. 

All of these factors combine to mean healthcare businesses, whether working within the NHS or fully private, often require finance to support operations. 

Existing healthcare businesses may need to buy new equipment through asset finance, plug cashflow gaps with business loans or raise a commercial mortgage to purchase a new premises. Startups may need even greater financial support to help convert or build a facility from the ground-up. 

Regardless of circumstances, Rangewell are here to support you. We are experts in the healthcare finance market and can help guide you through the application process and negotiate an offer on your behalf. Just as your patients place their trust in your team, you can trust ours to arrange the best offer for your specific needs. 

What is finance in healthcare?

Finance refers to loans provided to businesses on a secured or unsecured basis. As with any other form of loan, you’ll receive a certain amount of capital in exchange for a repayment plan that carries interest (rates) over a number of months or years (term). 

Secured loans are those where the lender holds security over an asset belonging to you or your company. Personal assets may include your home, so be careful about which securities are being offered when discussing options with lenders. 

Unsecured loans, on the other hand, refer to loans that have no securities and allow for a business to lend without offering any assets in return.

How can finance help a healthcare provider?

Finance is a flexible term that describes many different types of loan arrangements. Essentially, all involve a bank or third-party lender providing funds to your business with a repayment schedule in place that is often also secured by your business or personal assets. Finance can help solve many different problems, but for healthcare businesses, it is typically used to fund the following: 

Pay for running costs

Like any other business, medical companies face operating costs that consist of salaries, maintenance, rent, subscription fees, utility bills etc. Many of these costs are fixed over a period of time, but some are more variable and can catch even the most well-prepared healthcare provider by surprise. 

Whether the costs are accounted for or not, any gap in cash flow can create problems when it comes to paying operating costs. Rangewell can help you arrange a business loan to help pay operating costs and get your business back on a more profitable footing. In most cases, lenders will base decisions on your previous financial history so healthcare companies with longer operating histories will be able to secure better offers. 

Another cost you may need finance for is that of sourcing stock. Medicine, in particular, can be an expensive drain on your resources – but it’s one that some lenders will be happy to provide support for. Stock finance is built around your specific needs, so contact us today to learn more. 

Acquire a competitor or other healthcare business

When it comes to purchasing a competitor, you’ll need to raise a substantial amount of capital. For some businesses, this can be achieved through independent investors. For most UK healthcare businesses, however, financing is a more achievable option. 

Lenders will again look to base decisions based on your past profits and future plans, but will also assess the business you plan to purchase and run due diligence to ensure their asking price is fair and the acquisition will benefit your business so you can repay the initial loan.

Purchase premises

Many healthcare businesses start operating from a leasehold property and then decide they want to purchase it. From GP surgeries through to pharmacies, opticians and dental practices, Rangewell have helped all types of healthcare business acquire the freehold for their property by raising the appropriate level of finance. 

In a property purchase, the lender has added reassurance through the bricks-and-mortar value of the property. Commercial mortgages are, therefore more achievable than you may have considered and are a great option for healthcare operators looking to invest in the future of their practice. 

Property development

Building or converting a new healthcare facility is a significant undertaking, but for the right provider it’s an achievable goal as long as you can secure the right finance. Lenders will place greater scrutiny on property development projects and expect you to demonstrate experience with similar projects in the past. 

However, if you work with a property development team for the project, you can mitigate this requirement. Rangewell can not only help arrange the loan, but we can also connect you with developers who may be able to help you build or convert your facility. 

Acquire medical equipment

Medical equipment costs can be a challenge, with some machinery commanding prices that rise into the millions. Healthcare providers face increased demand to offer the best standards of care, which means offering cutting-edge equipment to patients. 

Fortunately, funding medical equipment is easier than you might expect, thanks to asset finance. In an asset finance arrangement, the lender purchases the asset for you and then you repay them, with the security coming from the value of the asset itself. 

Contact Rangewell today if you’d like to learn more about asset finance and how it works. 

What about healthcare refinancing? 

Another consideration for healthcare businesses is that of refinancing. This refers to a process by which you ‘sell’ a loan back to the provider or another lender, who purchases the debt back and offers a new agreement. This can facilitate many different opportunities – such as allowing a GP surgery to refinance a high-interest bridging loan into a longer-term, lower-rate interest loan. 

Whether refinancing is right for you will depend entirely on your business and your existing arrangements. In some cases, refinancing can save you hundreds of thousands of pounds, but this isn’t always possible. We’d advise only refinancing with the help of an expert team such as our own here at Rangewell to avoid making any costly mistakes. 

How to apply for healthcare finance

With all of the situations above demonstrating ways in which you may need finance, how do you actually secure a loan? First, you'll need to ensure your business can present itself in the best possible light, which means reviewing your experience, your staff roster, your financial performance and compliance with regulatory bodies and even your property lease conditions. 

Once you understand how strong your business is, you’re ready to apply. Here’s a step-by-step overview of the process, though the specifics will vary depending on the loan type and your business’ unique circumstances. 

  1. Understand your options: the finance types we’ve just discussed are far from the only options. Your healthcare business will have specific requirements and these will dictate which types of finance you need. In many cases, a blend of different loans can solve more complex challenges. 
  2. Create a business plan: this should be comprehensive and cover your existing business activity, future goals and a set of financial information with forecasts for the future. Your business plan is a crucial asset that lenders will want to see, so make sure it is done to the highest standard. 
  3. Negotiate with lenders: once you’ve identified a lender and approached them with your business plan, you’ll need to negotiate until you receive an offer. We’d advise securing at least three different offers to compare each against, but businesses without experience in the finance market may struggle to achieve that. 
  4. Secure offer and renegotiate if needed: the loan offer you consider should be the one with the most agreeable rates and terms. If the offer isn't what you'd hoped for, you can try to renegotiate but it's always better to do this with a broker on your side. Once accepted, funds are typically issued quickly, though some lenders are capable of rapid deposits to fuel last-minute activity such as bridging finance for auctioned property. 

Cut down on these steps and ensure a far smoother process with our help. Rangewell’s team will get involved from the first stage and will not only help you bolster your business plan, but also find the best offer for you and your business. Get in touch to learn more. 

Make healthcare finance simple with Rangewell

As you can tell from the steps above, deciding on which type of loan you need, which lender is right for your business and then securing an arrangement that works for your benefit is a complex challenge. 

Rather than struggling alone, why not leave it to the experts? Just as you take care of patients, we'll take care of your financing requirements - all at no cost to you or your business. We're experts in the healthcare sector and have supported countless doctors, surgeons, clinicians, pharmacists and more in raising the finance they needed to achieve their business goals. 

Get healthcare finance today

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