Care businesses run on cash that arrives late. Fees from local authorities and the NHS land weeks after the care has been delivered, CQC registration runs to its own timetable, and a vendor selling a home will not move the completion date because your bank is still sitting in credit committee. Something has to fund the gap between the money going out and the money coming in.
This post is for owners and operators of care homes, domiciliary care agencies and supported living providers who are weighing up care home bridging finance to close an acquisition or fund working capital while a slower, cheaper lender catches up. It explains where the gaps come from, how a bespoke bridge is structured, what we look at before lending, and when a bridge is the wrong tool.
Where the funding gaps come from in care
Most care operators we speak to are short of timing, not demand. Four situations come up repeatedly.
- CQC registration. A new service, or a change of registered provider on an acquired one, cannot trade until the registration is through. Rent, staff and fit-out costs start before the first fee is invoiced, and the registration date is not one you control.
- Local authority and NHS payment cycles. Fees are commonly paid in arrears. A change of provider often means the council's payment set-up has to be rebuilt, so the first invoices after completion can take longer than usual to be paid.
- Acquisition completion dates. The vendor sets the date and usually has another buyer in reserve. A high-street bank may lend against the home but wants post-completion trading, a registered manager in post and a fresh valuation before drawdown, which can be months after the date you need the money.
None of these are signs of a weak business.
How care home bridging finance is structured
A bridge is a short-term loan with a defined exit. Ours are bespoke, from £100k to £5m, typically for six to eighteen months, and priced in the teens per annum for a clean deal. We take no warrants or equity as standard, and we do not usually ask for personal guarantees.
What we do take is security. For an operator that owns its property, that is normally a first charge over the freehold (or a second charge behind an existing lender, at a lower loan-to-value). For a domiciliary or leasehold operator with no property to charge, we lend against the business itself: a debenture plus specific security over the receivables due from local authorities, the NHS and private payers. Public-sector contracts are good collateral because the counterparty pays, even if slowly.
The exit is the part we spend most time on. The usual routes are:
- Refinance onto term debt once the CQC registration is through, the registered manager is in post and there are a few months of trading under the new owner. This is the most common exit for acquisitions.
- Repayment from receivables as the payment cycle normalises and the backlog of fees is collected.
Interest can be serviced monthly or rolled into the facility and paid at exit, which matters when the whole point of the loan is that cash is tight. How we structure facilities generally is set out on our bridge finance page; the same principles apply to property-secured bridges for trading businesses in other sectors.
What a lender looks at in a care business
Because the loan is repaid by the business rather than by selling the asset, we underwrite the operation, not just the bricks. Four things first:
- Occupancy. Current and trailing twelve months. A home at 90% with a waiting list is a different proposition from one at 70% and drifting.
- Fee mix. The split between private, local authority and NHS Continuing Healthcare placements, and the average weekly fee for each. Private payers pay more and faster; council placements are more stable.
- CQC rating. Good or Outstanding supports the refinance, because term lenders read the same report we do. Requires Improvement is not a refusal, but we will want to see the action plan and reinspection timetable.
- Management. Is there a registered manager in post, or a credible candidate with an application in progress?
For property-secured deals, add a recent valuation and a loan-to-value with headroom (up to 60–70% for a first charge on commercial property is the usual range). For receivables-backed deals, a debtor ledger by payer and the main contracts.
Illustrative, round figures. An established operator agrees to buy a 40-bed freehold home for £2.4m. The buyer has £900k of its own cash. Its bank has agreed a £1.5m term loan in principle, but will only draw down once the change of registered provider is confirmed by CQC and there are three months of trading under the new owner. The vendor wants to complete in five weeks.
We provide a £1.5m bridge secured by a first charge over the freehold, a loan-to-value of about 62%, for a nine-month term. Interest at an illustrative 14% per annum is rolled up rather than serviced, so the operator keeps its cash for staffing and the first payment cycle. If the facility runs the full nine months the interest is around £160k plus an arrangement fee; if the bank refinances in month seven, as expected, it is less.
The operator completes on the vendor's date, keeps 100% of the equity, and the bank takes us out once its conditions are met.
Bridge versus the obvious alternatives
| Option | Speed | Cost | What you give up | Best when |
|---|---|---|---|---|
| Bank term loan | Months | Lowest | Time, covenants, conditions precedent | You can wait, or the bank will meet the date |
| Bespoke bridge | 2–4 weeks | Teens per annum | Interest and a charge over the asset | The date is fixed and the exit is clear |
| Vendor deferred consideration | Negotiated at the outset | Often cheap | Vendor retains a claim; may want security | Vendor is willing and not under pressure |
| Equity investor | Months | A share of the business, permanently | Ownership and control | You want a partner, not just a loan |
Our line is simple. If your bank will lend on workable terms in the time you have, take the bank; we are cheaper than equity but more expensive than a bank. Care home bridging finance earns its cost when the alternative is losing the deal, missing the registration window, or selling equity in a business that will be worth more in a year.
When a bridge is not the right answer
We decline care deals more often than we accept them, usually for the same reasons. There is no exit: no bank indication of a refinance, and receivables that will not repay the loan on their own. The business is loss-making with no plan that changes that within the term. The home is heading into an inspection with unresolved issues. Or the loan is really long-term capital dressed up as a bridge, in which case an eighteen-month facility at our pricing is the wrong product and we will say so.
If you are buying out a partner rather than a home, see our note on financing a shareholder buyout.
What a lender needs from you
You do not need a polished pack to start. A call with one of us is enough to establish whether the deal works in principle. To get to terms, we will want:
- Last two years' accounts and current management accounts
- Occupancy and fee schedule by room and by payer, with the trailing twelve months
- The latest CQC inspection report and any action plan
- Details of the registered manager, or the status of the application
- For acquisitions: heads of terms, the purchase price and the completion date
- For property security: title details and any existing valuation
- For receivables security: the aged debtor ledger and the main local authority or NHS contracts
- Your proposed exit, with any bank indication you already hold
With that in hand we can usually give a clear answer within days and reach drawdown in two to four weeks. Decisions are made by the two of us personally.
If you have a care acquisition with a fixed completion date, a service waiting on registration, or a payment cycle that is stretching your cash, talk to one of us about the specifics. We will tell you quickly whether a bridge fits.
Frequently asked questions
Can I get bridging finance for a care home before CQC registration is complete?
Yes, provided there is a credible route to registration and a clear exit. We lend against the property or the business, not the registration itself, so we can fund a completion while the change of registered provider is still with CQC. We will want to see the application status, the proposed registered manager and a realistic timetable, because the refinance usually depends on the registration coming through.
Do you lend to domiciliary care businesses with no property?
We can. Where there is no freehold to charge, security is usually a debenture over the company plus specific security over the receivables due from local authorities, the NHS and private clients. Public-sector contracts are reliable collateral even when they pay slowly. We will look closely at the debtor ledger, contract terms and staff retention, since a domiciliary business is only as strong as its rota.
What loan-to-value can I expect on a care home freehold?
For a first charge over commercial property, loan-to-values of up to 60–70% are the usual range. Second charges behind an existing lender are lower. The figure depends on the valuation, the trading performance of the home and how the loan will be repaid. Because the exit is normally a bank refinance, we tend to size the bridge to what a term lender is likely to support.
How quickly can a care business bridge complete?
Two to four weeks from first contact to drawdown is typical for a bridge. Property security needs a valuation and legal work on the title, which is usually the slowest part. Receivables-backed facilities can move faster if the contracts and ledger are ready. Decisions are made by the two co-founders directly, so the credit answer itself comes within days of seeing the information.
Is care home bridging finance regulated?
Finstock lends to corporate borrowers, and these facilities are not FCA-regulated consumer credit. We do not lend against owner-occupied residential property. Loans are subject to credit assessment, legal documentation and due diligence, and borrowing against a property or a business carries risk if the loan cannot be repaid. Nothing in this article is tax or financial advice; take your own professional advice before committing.