Financial solutions for first time buyers in the care sector

Old peoples homes, nursing homes and sheltered accommodation, children’s homes and other residential facilities are an important provision for the car sector.

According to the Office for National Statistics (ONS), demand will increase. It means plenty of opportunity for setting up a specialist residential home as a rewarding.

But of course running a care home is not simply a business. Looking after vulnerable people and those at the end of their lives is a huge responsibility.  

Compassion, a professional caring approach and a genuine desire to enhance the lives of residents are all essential, as it a commitment to meet extensive and demanding regulations.

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

The  CQC has detailed regulations for 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 homes at regular intervals and they may be put into special measures, or even struck off the register, if they fail to meet the necessary standards.

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.

But the biggest barrier to setting up a care home will be cost. The cost of buying suitable premises, equipping them and bringing in staff may be substantial.

At Rangewell we work with care homes across the UK. 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

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

Buying property to set up a new care home

Starting a care home business  may be an expensive venture. Unless you already have suitable property your first need will be premises.

 A very large residential house orl premises in use as an HMO many be suitable, or you may find a redundant hotel which has the necessary space, rooms and and communal areas.

The location  can be crucial. A town  may be more practical than a country location Size is also important. For a care home to be profitable you will need to be able to provide care for a minimum of 25 clients.Remember, you will  almost certainly need change of use planning permission provided by the local authority if you want to turn a private residence into a care home.

A residential mortgage is not suitable for buying business premises, and a commercial mortgage will be required. These are designed for business premises, and can can help your potential care business spread the cost of acquiring a suitable property over 20 years or more. With property being seen positively by most lenders, it may be relatively easy to secure a commercial mortgage 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.

Interest rates may be a little higher than residential mortgages, and there may also be arrangement fees.

At Rangewell we can help you with the application, find the mortgage providers who are most likely to be receptive to your business plans - and work with you to find the most cost-effective deal .

Buy an existing care home

An alternative is to buy an existing home.

This has an important advantage in that it will come ready to generate revenue from day one, providing a shortcut into profits.You may also find that it reduces the cost of borrowing - lenders are usually happier lending to an established business which can demonstrate viability with positive accounts from previous years. We can help you secure solutions to let you buy into an established care home. 

Funding equipment for your care home

If you are setting up a care home will have a wide range of equipment needs. If you plan on 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 hoists. You may need to fit out a kitchen capable of producing large numbers of meals, as well as business items such as a computer and printer.

Asset finance lets you spread the cost of  the equipment - or assets - you need. There are two key types of asset finance:

Hire Purchase allows you to 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. 

Leasing operates like a rental agreement. 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 solution for your care home <link>.

 Cashflow finance for care homes

Cashflow is a challenge for any business. If you are faced with a large number of large costs simultaneously, your could find that your cashflow has become negative  - that you business is losing money

Cashflow support and working capital finance can provide cash to deal with overheads, and keep your cashflow positive. It is usually designed to be repaid in the short- to medium-term, once the your business becomes profitable. Find out more about cashflow finance for care homes.

Insurance cover

Your new business will require insurance protection. As a minimum you will need need to arrange:

• Employers’ liability insurance - to cover 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 cover claims made by clients and their families for injury or damage. 
• 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

You may be able to find an insurance package specifically tailored  for your agency which combines all these types of cover from a broker familiar with the sector. The premium is still likely to be high - at Rangewell, we can find solutions which will let you spread the cost of the cover you need.

Tax loans for care agencies

Running a business wil mean tax, and a large quarterly VAT or annual tax demand can cause problems with cashflow. Tax loans help you spread the cost of your tax demands into affordable monthly payments. They mean that you care home business can have:

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

It can also ensure that you avoids larte payment issues with HMRC, with the  potential penalties and reputational damage that can follow

See how a Tax Loan can mean better control of cashflow.


Dealing with problems

Any business can face operational and financial challenges. At Rangewell, we know the solutions which can help your care home business deal with them. We can even help find financial solutions if you have a damaged credit history or CCjs, which are considered red flags by most lenders.

Find out more about finance for care homes facing financial difficulties.

How we help you capitalise your care home

Your new  care home business 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. We can help tailor cover for your plans

Call us now to get our care home funding  experts working for you.