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Nursing Homes

Care Home / Nursing Home Sector

The care sector is currently a very buoyant market and there are many opportunities for care providers to explore. Recent research indicates that the industry is moving away from large corporate ownership to an increasing percentage run by small companies and private individuals. The financing of purchase, expansion, new build development or acquisition is of fundamental importance and sound financial planning can make the difference between success and failure within this industry. It is vital that care home owners or potential purchasers work with financial industry specialists who have many years of experience within the sector.

This is where Open 4 Business Finance Ltd can help you. Our staff have over 50 years banking experience behind them, and our care home industry specialist has a number of case studies that he has dealt with within the sector.With longer life expectancy throughout the UK, (research showing that in twenty years time the number of people over 85 will increase by two thirds), Nursing and Care home provision will need to expand to meet this demand.

The regulatory system that governs the industry is very stringent, and minimum standards must be adhered to. Many care home providers can be hard pushed to comply with some of the requirements and recommendations now being noted within CSCI (Commission For Social Care Inspection) inspection reports, at the same time as managing the staff recruitment and ensuring that beds are filled. For commercial lenders this can be off-putting, particularly for those applicants without industry experience.

What lenders are looking for when being approached for care home finance:

§ The quality of the freehold concerned. The National Minimum Standards (NMS) which stipulates room sizes, and the ratio of single and en-suite accommodation will be an important factor to the lender. Properties that fully comply with the NMS will attract funding far easier than non compliant/partially compliant properties.
§ Location of the property and demand for services in the area.
§ Evidence of most recent CSCI inspection report to establish areas of concern that potentially have yet to be resolved.
§ Occupancy levels are of major importance, distinction between private paying and state paid occupants. Evidence of referral programme for new occupants is also beneficial.
§ Competition within the area and as important potential threat of new competition.
§ Existing trading accounts for the business, and if new purchase a detailed business plan would be required to ascertain future potential as well and compare against historic performance.
§ Experience within the sector will play a crucial role. New entrants to the sector must be able to demonstrate how they researched and planned their intended business.
§ Experience of the management team.
§ Quality of staff and particularly qualifications of staff. The NMS state a target of 50% of all care staff to have achieved an NVQ 2 and all managers are to hold and NVQ 4 and a Registered Managers Award.
§ Lenders will want to understand the break even point of the business and a break even point of 75-80% occupancy is considered healthy.

A commercial mortgage is likely to be used to fund the purchase of the freehold or remortgaging existing borrowing.
Terms can be arranged up to 25 years although in many cases 15 years is the norm.

Loan to values up to 75% can be arranged and in very strong cases it is possible to achieve higher loan to values.

Changing industry dynamics have meant that businesses now require specialised funding options as opposed to traditional banking services and to this end it is important that care home owners obtain the right financial advice from industry sector financial specialists.

This is where Open 4 Business Finance Ltd can help as we also have access to other forms of specialist funding including:

§ Working capital finance
§ Asset Finance for fixtures, fittings, vehicles.
§ Development Finance
§ Payroll Finance

There are real opportunities within this sector and Open 4 Business Finance Ltd look forward to discussing your finance requirements.
Freephone us today on 0800 0778987 where one of our care home sector specialists will be delighted to assist you.

Printable Care Home Flyer

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