With demand for care continuing to grow, many providers are exploring how to strengthen, expand or future-proof their services. But whether you are considering an acquisition, refurbishment, extension or new development, one question often comes first – what do lenders actually want to see?
That was the focus of a recent webinar hosted by Iain Corrigan, Commercial Director at CoolCare, alongside Jonathan Russell, Relationship Director – Health & Social Care at Virgin Money. Drawing on more than 35 years’ banking experience, Jonathan shared valuable insight into how lenders assess care businesses, what gives them confidence and where operators can improve their chances of securing finance.
A key theme throughout the discussion was the importance of evidence. Lenders want to see that a care business is well run, commercially disciplined and able to make informed decisions. That is exactly why management information matters.
At CoolCare, we see first-hand how the right systems and visibility can help providers strengthen performance. In a recent webinar with Christie & Co, we shared that over the past two years, 20% of our customers have expanded their portfolios. We also found that customers using our digital platform have, on average, achieved 11% higher weekly fees, maintained 4% higher occupancy and reduced agency staff usage by 13%, all indicators that support stronger profitability, operational control and lender confidence.
Here are some of the key tips from the session:
demonstrate strong management control.
One of the biggest things lenders look for is confidence in how a home is run.
That includes day-to-day operational control, leadership strength and evidence that the business is being managed properly. In care, regulatory performance is often one of the clearest indicators of this.
Jonathan explained: “One of the key things is how well the home’s operated. CQC ratings give us a window into how well the homes are being run.”
A Good or Outstanding rating will always help, but a Requires Improvement rating does not necessarily mean finance is out of reach. What matters more is whether the provider understands the issues and has a credible plan to address them.
As Jonathan put it: “Don’t try and hide anything. So be upfront. If there’s a Requires Improvement, explain to the bank why it is. Share your action plan.”
For lenders, transparency goes a long way. A home with a clear improvement strategy and experienced leadership may still be seen as a viable opportunity.
back up your business plan with evidence.
A strong business plan is essential, but lenders want more than a set of optimistic figures.
They need to understand how your numbers have been built, what assumptions sit behind them and whether those assumptions are realistic. Occupancy, weekly fees, staffing costs, maintenance and local demand all need to be considered carefully.
Jonathan said: “They need to be based in fact. Let the bank know what the numbers have been based on. What are the assumptions you’ve made?”
He also warned against presenting numbers without context: “Don’t just present a profit and loss to the bank and say, here’s your projections.”
This is where compelling management information becomes especially important. When providers can evidence performance through reliable data on occupancy, fees, staffing and income, it becomes much easier to build a credible case for funding.
be realistic, not over-ambitious.
Lenders understand that projections are not exact. They are not expecting a business to hit every number perfectly. What they are looking for is realism.
A business plan that is too ambitious can create more concern than confidence, especially if it is not grounded in operational evidence. On the other hand, a clear, sensible forecast based on good assumptions shows that the provider understands both the opportunity and the risks.
This is particularly important in care, where variables like occupancy build-up, staffing pressures and fee mix can all have a major impact on performance.
Having the right systems in place to monitor these aspects can make a real difference, helping providers make better-informed decisions and giving lenders greater reassurance that projections are rooted in reality.
show that your home or group can generate sustainable profit.
At the heart of every funding decision is one simple question, can the business repay the debt?
Jonathan said: “Ultimately, we want to know how we’re going to get repaid. It’s building a picture of, can this home, can this group generate ongoing sufficient cash and profits to repay a bank debt?”
For lenders, that means looking beyond a single set of figures and building a broader picture of the business. They will want to understand historic trading performance, how occupancy has been trending, the quality of earnings, the strength of the management team, the condition of the home itself and whether the business looks sustainable over the long term.
For providers, this highlights the importance of having strong visibility across the business. The better grip you have on performance, the easier it is to present a clear, credible case for funding.
This is where many CoolCare customers are able to strengthen that picture, using the management controls and MI available to track performance more clearly, improve oversight and demonstrate to banking partners that the business is being run with confidence and control.
experience matters, especially for growth and turnaround plans.
Not all funding requests are viewed in the same way. An experienced operator with a strong portfolio and a proven management team is naturally going to give lenders more confidence than a first-time buyer with no track record. That is especially true when it comes to more complex opportunities such as turnaround acquisitions, large refurbishments or new developments.
Jonathan highlighted that lenders will often take comfort from the strength of the wider group, particularly where an operator has experience improving underperforming homes.
That track record can make a real difference when a lender is deciding whether a project feels achievable and investable.
understand that the care sector still offers strong opportunity.
Despite cost pressures and ongoing challenges across the sector, the long-term outlook for care remains positive.
Demand continues to grow, while the supply of care beds is still struggling to keep pace. That makes social care an area of continued interest for lenders who understand the market.
Jonathan noted: “It’s probably never been a better time for somebody wanting funding to look for it.”
That is encouraging news for providers with the right plans in place. The opportunity is there, but preparation remains key.
work with lenders who understand care.
One of the strongest messages from the webinar was the value of sector knowledge. Care is not like every other market. Regulation, staffing, occupancy, fee structures and operational risk all carry nuances that generalist lenders may not fully understand.
Jonathan explained: “There are some nuances in healthcare funding that if you don’t understand the sector, you could get wrong.”
A lender with sector expertise is more likely to ask the right questions, interpret the risks fairly and understand what good looks like in a care setting.
Unlocking finance for your care home is not simply about presenting a need for funding. It is about showing that your business is well run, commercially sound and positioned for sustainable success.
From management control and compliance to realistic forecasting and operational visibility, lenders want confidence that the business can perform over the long term.
At CoolCare, we understand how important strong operational foundations are when it comes to growth. By helping providers improve visibility, efficiency and control across their homes, we support the kind of informed decision-making that strengthens businesses for the future.
To explore the insights in more detail and see how stronger operational visibility can support growth in your care business, watch the full webinar recording here: https://coolcare.co.uk/webinar/care-home-finance-care-home-funding-care-home-loans-funding-for-care-homes-care-home-business-finance-finance-for-care-providers-lending-to-care-homes-care-sector-banking-finance-for-ca/
Additionally, to find out more about how CoolCare can help your care home run more efficiently and profitably, get in touch with the team.
