Care Home Finance: funding the business of caring
Rangewell's business finance team includes experts with hands on experience in the Care Home sector. They know the challenges you face and the lenders who can help you answer them.Speak to one of our experts020 4525 5312
- Asset funding from 6%
- Secured loans form 2% above base rate
- Startup loans
- Jigsaw funding
- Commercial mortgages from 2% above base rate
- Refubishment loans
- Development loans
- Bridging and auction loans
- Contract finance
- Cashflow support
- Working capital
- Unsectured loans form 4.9%
Talk to Rangewell – the business finance experts
Our business finance experts understand Care Home Finance and know that more than 30 lenders claim to offer specialist care home finance - but many have become less active and have changed their lending criteria. We know the lenders who really are keen to lend to your business. Most advisors have not kept up - at Rangewell we meet all our lenders at least quarterly and are constantly showing them live transactions - our expertise and contacts make it easier for you t find the funding solutions you need from the lenders most likely to lend.
At Rangewell we recognise your professional status, and we work harder to find you better solutions - which can include 100% finance for many of your needs.
The UK population is growing older, and the need for care homes is growing.
Residential care homes, providing care for elderly and frail people when living independently has become too much of a struggle involve more responsibility than many other business sectors. But, with the number of people over the age of 85 set to double from 1.4m to 3.5m over the next 25 years, the need for care home places is growing fast.
Care homes range from the frankly luxurious, for affluent residents, to the more basic, where the local government pays the fees. All need to be registered and inspected to ensure they meet standards set out in the Care Standards Act. The act dictates the standards for nursing, facilities, entertainment and the home environment, to ensure that the physical and emotional needs of residents are met. It has helped drive up standards across the sector, and demonstrated the need for motivated and qualified staff, and a real commitment to resident care.
Costs have risen since the act was passed. New regulations have forced many existing homes to close, and made it more difficult to convert existing properties into care homes. However, with sufficient investment, buying, or setting up a care home can still provide, a financially rewarding business.
At Rangewell, we understand the costs and challenges that the care sector presents, and can help you find the solutions.
Rangewell - the experts to help and support you with appropriate and affordable funding options
Getting the most appropriate finance solution will depend on your particular needs and circumstances. We can help source specific funding for different types of care home business and at different stages of business, including:
- care sector first-time buyers
- finance for children's care homes
- finance for elderly care homes
- funding for supported living business
- care for vulnerable adults
You may need to find the right type of funding option to allow you to:
- Refurbish your current premises
- Acquire new premises
- Acquire or upgrade your equipment
- Update kitchens or communal areas
- Fund ongoing operating costs
- Finance growth
- Deal with unexpected tax bills
Buying your premises
The key to any successful care home business is the property itself. The recent changes to legislation have made it harder to buy and convert many older properties, because of the amount of work required to provide facilities such as lifts and widened doorways, and many larger care home providers are turning to purpose-built homes.
Finding a suitable property in the right location can be challenging. There is another consideration. The property must appeal to the residents and their families. A large attractive building, ideally with gardens may be an idea, and this type of property may command a premium in many parts of the country.
The price of care homes typically ranges from around £400k to £2m in most regions of the UK, although substantially larger costs will be expected in London and other central urban areas.
Buying, rather than leasing is the preferred route for most care home operators. A Commercial Mortgage may be the most appropriate form of lending. Commercial Mortgages work in a similar way to a residential mortgage, spreading the costs of acquiring property over 20 years or more. You may need to provide a deposit of around 40%, and it is uneconomical to borrow less than £50,000, but there is no set upper limit.
Commercial Property Finance is arranged on an individual basis. Get our help in finding the most competitive lender.
Refurbishment and fit-out
There will be substantial conversion and fit-out costs. The interior must be safe for residents and accessible for wheelchairs and meet a long list of regulations. Provision for fire escapes, for example, will need to be even more rigorous than those for hotels.
Contact us to find out more about funding for fitting out a care home business
Equipping your care home
You may need a range of equipment for your care home. A catering kitchen may be essential, and you may need specialist items such as lifts for residents who are losing mobility. Asset Finance can help make the equipment you need more affordable, by spreading the costs over time.
With Asset Finance, the funds you need are secured on the asset itself. This means that if you were unable to make the repayments the lender would simply repossess the asset. It can also reduce the cost of the finance, as a lower risk to the lender usually means lower interest rates to you.
There are several different types of Asset Finance:
Hire Purchase lets you hire the equipment until you have paid for it. Agreements last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments, after which the equipment becomes yours. HP may be most suitable for equipment you will use for the long term.
Leasing is much like a rental agreement. You pay a monthly charge to use the asset. With some arrangements maintenance, and repairs will be the owner’s responsibility. It means you can easily update your equipment.
Contract Hire may be the most appropriate form of Asset Finance for your business vehicles. With business Contract Hire, monthly charges are based on the purchase value less the estimated value of the vehicle at the end of the agreement.
Buying an existing care business
Buying an existing established care home could offer immediate returns, although you should be certain that the business is truly viable, and meets all the necessary regulations.
A Secured Loan, with the security provided by the property itself, could help you to borrow the large sums required for a buy in our buy out of an existing care business. You might also consider ‘jigsaw’ funding. This is a bespoke finance package, made up of a number of loan types, such as a Commercial Mortgage for the premises, with another loan to cover goodwill, and Asset Finance for the equipment.
Contact us to find out more about funding for buy-ins and buyouts.
Working Capital Finance
Operating your business will mean costs for staff, utilities and other overheads. Until you start to show a profit, you may need finance to cover these costs.
Working Capital Finance is designed to boost the capital available to your business when it is not generating sufficient capital itself. It's often used to provide cash to pay staff and suppliers while business is slow during the early stages of a new business, or during a period of growth when your cashflow is already stretched. It is usually designed to be repaid in the short- to medium-term, once your business is established and running.
Find out about Working Capital Finance.
Revolving Credit Facilities bring a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds if you need them.
Contact us to find out more about ways to smooth your cashflow
Tax is an issue for every business. A large quarterly VAT or annual tax demand can cause problems for your cashflow, particularly when it falls at the same time as other expenses. Funding is available to let you spread the cost of your tax demands into predictable monthly payments.
Benefits of a Tax Loan:
- Better control of cash flow
- Fixed monthly payments
- Quick and simple to arrange
- Avoids issues with HMRC and potential penalties
Business loans are a versatile way to deal with a wide range of costs.
Unsecured Loans are like personal loans and are repaid in monthly or quarterly instalments over an agreed term, usually under 5 years. Modern lenders can provide fast unsecured lending, but you might need to provide a personal guarantee.
You usually can’t borrow more than one month’s turnover without security, and most unsecured loans providers will not lend more than £250,000. For a new business operation, many lenders might only be prepared to offer a secured loan.
Secured Loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your care home, or your own home You can have longer to repay, and enjoy lower interest rates. This means that monthly repayments can be lower and easier to fit in with your cash flow, and it may be possible to borrow larger sums of money if you can provide suitable security.
Our lending teams can discuss your needs, and help you find the kind of loan to fit your business needs.
Should you consider alternative business funding?
Alternative business funding, such as Crowdfunding and Venture Capital, might appear attractive but at Rangewell we believe they have major drawbacks.
Costs can be high, raising the funds you need can mean long delays or even fail altogether, and you could even run the risk of losing control of your business. Fortunately, we can help you find better alternatives.
A new generation of business lender has sprung up, which can adopt a more flexible approach to lending.
Online lenders may be able to provide fast lending with the minimum paperwork, specialised lenders can provide loans to businesses that don’t meet the criteria of mainstream business lenders.
How we help you capitalise your business
At Rangewell, our expertise works to bring you the financial solutions you need to capitalise your business, whether you want to fund capital expenses, working capital or growth.
We understand the special business challenges of running a care home. We can work with you to understand them and find answers, from the most appropriate lenders. Whether you have a straightforward, small scale funding need, or require a complicated ‘Jigsaw’ funding plan made up of a combination of financial products to buy an existing business, we can work with you to find the answers and streamline your application.
You can also access further business support for care homes here.
Discover our range of finances
Every type of finance for every type of business
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.
Helping you build your profits
Lending tailored to your businessAt Rangewell we can help you find the most appropriate finance for any funding your Care Home needs.from Commercial Mortgages to Asset Finance, and everything in between.
Saving you moneyGetting the most competitive funding saves you money. At Rangewell, we can search the entire UK lending market for the deal that’s right for you.
Helping you provide the best careBeing able to provide the latest equipment and facilities means better care for residents.
Asset funding - reducing cost and riskMost lending must be ‘secured’ on an asset of some kind that the lender may take if you don’t keep up the payments. If you were unable to make the payments on asset funding, the lender could simply repossess the equipment to cover their loss.
'Jigsaw' fundingA single type of finance may not be the solution for the varied funding needs that every Care Home has. We can help you set up jigsaw finance - with the most appropriate type of finance for each particular purpose.
Specialist lendersSome funding providers specialise in particular sectors. At Rangewell, we can help you find the most appropriate lenders for your care business.
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%
The downsides to finance - and how to avoid them
How to arrange finance - What paperwork do you need?
What type of information will I need to provide with an application (eg, company numbers, registered office details, VAT numbers, accounts)?
Are all lenders authorised and regulated by the Financial Conduct Authority?
How do I go about arranging Care Home finance?
Key terms explained
More information available in our care ecosystem for businesses in the care and support sector/care model