Finance for Higher Education

Higher education has become a commercial business, competing for student numbers. Attracting students to your educational establishment means offering the appropriate courses, facilities and accommodation, and that demands investment.

The Government is, of course, the ultimate funding source for most higher education. The Department for Education’s public funding for higher education in England, in the form of grants and tuition fee loans, is now over £9 billion a year.

However, undergraduates will also make a sizable financial investment in their future, in the form of fees. Whether or not these fees are provided by student loans, it means that Higher Education establishments must compete for students. Some 85% of up-front funding is now conditional on the choices made by students. This means that to attract sufficient student numbers to generate revenue and support government funding the ability to offer top quality facilities and learning environments has become a commercial necessity.

As a result, commercial finance is becoming increasingly important for higher education providers.

At Rangewell, we work with schools, colleges, universities and other higher education providers to find financial solutions from across the entire commercial lending market.

Understanding your funding options

Our team are experienced in understanding the challenges the educational sector presents, and we can find a wide range of financial solutions to fit your needs.

You may need to find the right type of funding for:

• Property Finance
• Acquiring equipment and assets
• Supporting cashflow
• Capital funding

Property Finance

You may have long-term plans for enlarging your campus and building or acquiring structures to meet academic and accommodation needs. We can work with your property management team to help find the most appropriate and cost-effective property funding solutions.

Commercial Mortgages

A Commercial Mortgage operates much like a residential mortgage. The loan is secured on the property itself and can run for 15 years or more. It can be used to buy land and existing premises of all types. This can include properties for use as student accommodation, which will provide a direct source of revenue.

However, in contrast to a residential mortgage, the interest rates for Commercial Mortgages are arranged on an individual basis. Lenders will look at your financial propositions and projections to establish a fair rate. Our knowledge of the lenders and the rates available can be essential to achieve the most competitive deal.

Find out more about Commercial Mortgages.

Bridging and Auction Finance

Bridging Finance is a short-term finance solution which provides a quick way to finance the purchase of a property. The lender will take a first charge and will seek repayment once the loan has come to term. You may refinance with a conventional mortgage or repay the loan from the sale of the property.

Auction Finance is a special type of Bridging Loan which lets you arrange funding in advance of an auction. Auction Finance can provide both the initial deposit due when the hammer falls, and balance of the hammer price, which most auction houses require within 28 days.

Refurbishment Finance and Property Development Finance

Buying run-down property, or even property that is uninhabitable, is not possible with conventional mortgage funding. Refurbishment Finance can provide the means to buy and refurbish property.

Property Development Finance takes things further and can provide funding to buy property for conversion or demolition and redevelopment. It is usually only available for experienced developers with a record of success on similar projects, but as an academic institution with a professional property team, you may be able to secure funding on the same basis as commercial developers.

Funding can range from single property projects to major new development schemes. Property Development Finance usually takes the form of a short-term loan and lenders may advance up to 70% of the gross development value.

Finance for student accommodation

Student accommodation can be an important source of revenue. A number of solutions exist which will let you fund buying and converting, or building student accommodation.

Find out more about Property Development Finance.

Raise money with a Commercial Mortgage

A Commercial Mortgage can also be used to raise funding.

By taking out a new Commercial Mortgage on your existing property you will receive a cash lump sum, which you can use and invest as you wish.   So, your college itself, halls of residence or any other premises can be used as a cost-effective way to raise funding for you to use elsewhere.

Acquiring equipment and assets

You will be faced with an ongoing expectation for equipment from all your departments, and technology faculties may have particularly costly demands.

Commercial sponsors may often be willing to provide major items. However, you will still need to provide a huge range of assets, from the full spectrum of laboratory and specialised research equipment to conventional office equipment, IT hardware and software.

Asset Finance - Hire Purchase and leasing - is a range of funding solutions that can help make virtually any type of equipment affordable.

There are several types of Asset Funding:

Hire Purchase

Hire Purchase (HP) allows you to spread the cost of buying equipment. Arrangements generally last between 6 and 60 months and you pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours.

Equipment suppliers will offer finance plans, with HP deals to help them secure sales. These may seem attractive - but can include hidden costs which push up the real cost to you.

At Rangewell, we can often help set up asset finance that undercuts the deals offered by equipment suppliers, or which let you take advantage of the lower costs of pre-owned equipment.

Finance and Operating Leases

Finance and Operating Leases are similar arrangements that work like rental agreements; they let you spread the cost of equipment with no upfront payment. This could be the best option for equipment with a limited life: You simply return it to the finance house at the end of the lease, leaving you free to update to the latest technology. This may be particularly appropriate in sectors where the pace of technological change is rapid, and being forced to use older equipment can compromise your quality.

Asset Refinance

The equipment that you have already bought represents a considerable investment. Asset Refinance lets you re-use that investment to fund any aspect of your activities, while still having full use of your assets. A finance company will first buy an asset from you, to provide you with a cash sum. then, they let you buy the asset back from them, under a new finance arrangement, with monthly repayments.

You can use asset refinance to release cash from your existing investment in assets. You can also use it to replace existing finance deals to reduce your monthly outgoings.

Supporting Cashflow

Maintaining a healthy cash flow - simply ensuring that you have funds available as cash for any and all routine costs - is essential for efficient management. However, the academic year will mean that cash payments are received in large tranches, when student fees and government grants are received often at the beginning of semesters. Payments for staff salaries and suppliers will be due all year round.

Commercial cashflow support funding can provide the funds you need to deal with cash shortfalls. There are numerous solutions available, usually taking the form of a facility that provides short-term funding as required, secured on the income forecast in the next funding round or semester.

How we help you capitalise on your Higher Education business goals

At Rangewell, we work with the entire lending industry. Our finance experts know the types of finance products available, and are experienced in putting them to work for clients of all types.

Our team includes experts in the needs of the academic sector.

We put this knowledge to work for you, finding the most competitive deals for the property, equipment and cash flow support you need.

We know which lenders who can offer the most competitive rates for the academic sector. Whether you need straightforward finance or want ‘Jigsaw’ funding made up of a combination of lending types, we have the answers you need.

Simply call us now to find out more.