Read about our innovative approach to care home financing

We are seeing an increasing number of enquiries for loans to fund the acquisition, or refinancing, of care homes.

Interest in the care home sector is growing. We’ve seen both new entrants to the market and existing operators looking to acquire new property, not least because of the attractive returns on offer.

Discover what’s driving that growth, and our lending philosophy in this market.

Demand for care home places is increasing

According to government figures published by the Office for National Statistics, there was a “statistically significant” 3.1% increase in the number of care home residents in the year to March 2023.

The growth in the care home sector is being driven by two key factors:

1. An aging population driving growth in demand for care home places.
2. Local authority financial challenges meaning they will “block book” beds in privately-owned homes.

There is a lack of high-quality stock, which means that developers are seeking to take advantage of the opportunity created by this increase in demand.

As well as care homes for the elderly, the sector also includes children’s homes and specialist care facilities for conditions such as dementia and mental incapacity.

We have a flexible approach to care home lending

We have long supported care homes with bridging and stabilisation loans.

Typically we are asked to fund new care businesses, or to step in when a stabilisation period is required. Our flexible approach to lending enables operators to buy time before moving on to traditional term finance at a later date.

There are two common reasons why a stabilisation loan can often be appropriate:

1. To help stabilise a home from a regulatory perspective if a low Care Quality Commission (CQC) rating means getting bank funding is difficult.
2. To provide financial stability if the home is currently not generating enough profit to support the requested loan amount.

Our main focus is on the borrower and their track record, and gaining a full understanding of any issues the business is facing. Then we will analyse their business plan and forecasts in order to get comfortable.

We’ve already funded a substantial number of care home deals this year, with the largest transaction being over £20 million.

Get in touch 

If you’d like to find out more about our commercial lending proposition and how we can help you and your clients, give us a call.