New entrants to the Care Home sector, often ask advice about how to fund their project

The team at Swift Management Services have always helped new entrants into the health and social care sector set up a new business, but recently we have been asked to assist clients to obtain funding for their projects.

The Care Home sector is vital to the overall health and social care arena, and this came to the forefront during the recent Covid-19 pandemic. Despite the vital services that the care home industry provides, for new entrants, securing financial support is challenging.

Within this blog we provider the reader with some of the options available to new entrants into the Care Home sector.

1.     Traditional Bank Loans

One of the most common ways to obtain financial support for a care home is through a traditional bank loan. This type of loan is often secured against the care homes assets, it requires a good credit history and business plan. But as a new entrant into the industry without a trading company the credit history can be almost impossible to overcome, without being able to raise the funds to buy the first care home it is not possible to secure the loan against the assets of the home.

While these loans can be difficult to secure, for a new company, they offer a competitive interest rate and flexible repayment plans. The flexible repayment plans enable a new care home, to fill the beds before payments increase.

In recent years the challenger banks have been considered a good option for new entrants, their rates may not be as competitive as high street banks but their threshold for risk versus investment is higher.

2.     Equity investment

Another option many of our new entrants consider is to secure equity investment. This type of funding involves selling a percentage of the business to an investor in exchange for finance. This type of funding is not without risk as it may secure large amounts of funding, but it also can involve giving up some control of the business.

3.     Angel investment

Angel investors are high-net-worth individuals who invest their own money in businesses in exchange for a stake in your company. A famous UK TV programme is based on this type of investment.

Angel investors can supply valuable expertise and support, in addition to finance. The difficulty for the care home industry is finding the right angel investor who can add value to your business.

4.     Crowdfunding


Crowdfunding is a relatively new way to secure small levels of finance for Care Homes. The crowdfunding concept involves raising money from a large number of people through an online platform. Crowdfunding can be a good way to generate interest in the business while securing finance at the same time. This can be particularly useful in smaller community based projects.


5.     Government Grants and Loans


Government Grants and loans may also assist. These grants and loans are designed to help new entrants access finance, and can be used for a variety of purposes, including purchasing of equipment and staff training.

There are several options available to a new entrant into the care home sector to enable them to fund their projects. However, whether you are looking for a government loan to buy equipment or looking to get investment, a sound business plan, competitors analysis or cash flow forecasts can be vital as part of the application process. Swift Management Services are happy to work with a new entrant to examine the options and support the business planning process.  For more information contact: or call 020 8087 2072.