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Financial solutions for children’s care homes

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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

Versatile

  • Answers for all types of challenges
  • Solutions tailored to your needs
  • Arrangements tailored to your circumstances
  • Assets, cashflow, growth capital

Talk to Rangewell - the business finance experts

Running a children’s home demands dedication - and funding. At Rangewell, we know every lender in the market and can help you find the funding you need.

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 funding

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 exist 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 providing food, shelter, and 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, quality assurance - most privately run homes have a higher number of staff on duty in LA homes than those run by private organisations.

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.
 


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. 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 know 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[2]
  • 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 have help to 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 great issues when setting up a care home business, the there will still be practical and financial challenges to meetl. 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


 

Set up a new children’s home

Starting a children’s home may require considerable investment. Unless you already have suitable property your first consideration is going to be finding suitable 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 commercial 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 loan.

Remember, you will need 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 setup 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.

 

Buy 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 the cost of borrowing - lenders are usually happier lending to an established business which 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 bought with hire purchase

 

Leasing is 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 children’s home <link>.

 

Staffing for your children’s home

It is up to the owners of homes,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  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. It will increase the cost of running your home, and may lead to a difficulties with cashflow.

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

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 acquiring 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. Find out more about solutions for professional indemnity.


 

Tax loans for care homes

A large quarterly VAT or annual tax demand can cause problems with your cashflow, 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 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 for care homes.


Dealing with problems

To ensure care providers are meeting the required standards, the CQC inspects Children’s homes at regular intervals. It set high standards, and bases its checks on five key service areas. These are safety, effectiveness, leadership, standard 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.  Iff 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.

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 as 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.

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

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Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.

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Download Rangewell’s free and detailed guide to Finance for your Care Home

Rangewell Ebook -  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

  • Download now

  • More information available in our care ecosystem for businesses in the care and support sector/care model

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Getting the right funding arrangement is essential

There are many forms of business finance available. Getting the most appropriate type for your particular needs is essential to avoid excessive costs.

Your key equipment could be at risk

If you are unable to keep up repayments on a hire purchase or lease agreement, the equipment your practice depends on could be could be at risk.

Long-term financial commitments

You may not be able to pull out of a finance arrangement once set up. This could present a problem if you change your business plans.

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