Business funding for care homes

A care home is lent against as a property and a regulated business, and a lender’s first questions are how full it is, who pays the fees and what the regulator last said about it. The money goes into buying a home, adding beds, refurbishing rooms to en-suite standard or carrying the gap between paying staff and receiving council fees. In England a buyer’s company has to register with the CQC for the home before it takes over, and the lender times its funds to match.

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The three sources of a care home’s income

Council-funded residents

The local authority pays a weekly fee for residents it funds, at a rate it sets and publishes. A resident in England with capital above £23,250 in 2026 to 2027 pays the full cost of their care, and below £14,250 pays only from income.

Self-funding residents

Residents who pay their own fees are charged the home’s own rate, which is set by the home and is higher than the council rate where the home can fill its beds at that price. Who pays for care home fees.

NHS-funded nursing care

For residents assessed as needing nursing, the NHS pays the home a flat weekly rate towards the nursing, £267.68 at the standard rate from 1 April 2026, on top of the fee from the council or the resident.

A 40-bed home at 90% occupancy

Illustrative example

A residential and nursing home with 40 beds has 36 residents. The weekly fees are assumptions; councils publish their own rates and a home sets its private rate. The NHS rate is the 2026 to 2027 standard rate.

20 council-funded residents at an assumed £850 a week
£17,000.00
10 self-funding residents at an assumed £1,250 a week
£12,500.00
6 nursing residents at an assumed £1,000 a week
£6,000.00
NHS-funded nursing care for those 6 at £267.68
£1,606.08
Income a week
£37,106.08
Income a year, 52 weeks
£1,929,516.16
Income lost a year if two council-funded beds stay empty
£88,400.00

The building, the night staff and the manager cost the same with two beds empty, so the lost fees come off the profit. A lender tests the home at lower occupancy for that reason. Run your own figures through the debt service cover calculator.

CQC registration and the devolved regulators

In England a care home has to be registered with the Care Quality Commission. When a home is sold, the incoming provider must be registered for the regulated activity at that location: a new provider applies for registration, and an existing provider adds the location to its registration. The seller and the buyer apply around the same time, and the CQC assesses the two applications together. The outgoing provider then changes or cancels its own registration.

A lender funding a purchase will not complete until the buyer’s registration is in place, and it will read the home’s latest CQC rating and inspection report. A poor rating can stop council placements and empty beds, so it goes straight to the lender’s view of the income.

Scotland registers care homes with the Care Inspectorate, Wales with Care Inspectorate Wales, and Northern Ireland with the Regulation and Quality Improvement Authority. Each has its own process for a change of owner.

Shops along a cobbled street in Norwich

What care homes borrow for

The largest sums go on buying homes and on adding beds: an extension, a new wing or converting an adjoining building. A commercial mortgage pays for a purchase, and development finance pays for building work in stages. A bridging loan can complete a purchase before a mortgage is agreed.

Refurbishment is the steady spend: en-suite bathrooms, call systems, profiling beds, hoists, kitchens and laundries. The equipment suits asset finance, and the building work a business loan.

Working capital is the third need. Councils pay in arrears on their own terms while wages leave every week or month, and a home that grows its council-funded beds widens that gap. Invoice finance advances money against council invoices, and an overdraft or revolving facility covers the rest.

What worries a lender about a care home

Occupancy comes first, and lenders want it month by month over at least two years, with the fee mix for each month. Then staffing: the National Living Wage for workers aged 21 and over is £12.71 an hour from April 2026 and £13.21 from April 2027, employer National Insurance is 15% on pay above £5,000 a year per employee, and a home that relies on agency staff pays more for each shift. A lender reworks your costs at next year’s wage rates against the fee rise your council has published.

Then the building. A home with small rooms, shared bathrooms and no lift can lose self-funding residents to newer homes, and a lender will ask what it would cost to bring it up to standard. A valuer reports on the home as a trading business, so the value rises and falls with occupancy and the fees.

Documents to have ready

Funding that fits a care home

Commercial mortgage

A commercial mortgage buys a home or refinances one to pay for more beds, secured on the property and its trade.

Development finance

Development finance releases money in stages for an extension or a new wing, and is repaid from a mortgage once the beds are full.

Invoice finance

Invoice finance advances a share of each council invoice when you raise it, so wages do not wait for the council’s payment date.

Asset finance

Asset finance pays for beds, hoists, call systems, laundry and kitchen equipment, secured on the equipment.

Your own position as the owner

Care home lending to a company that owns its building can still come with a personal guarantee from the directors. What a personal guarantee means for a director. A care home held in your company is part of your estate for inheritance tax; from 6 April 2026 the 100% business relief allowance is £2.5 million, with 50% relief above it. Will my business pay inheritance tax?

When you sell, Business Asset Disposal Relief taxes qualifying gains at 18% up to a lifetime limit that falls from £1 million to £500,000 for disposals on or after 6 April 2027. Selling your business.

Business loan affordability calculator

Your profit against all your loan repayments, new and existing, as the cover ratio a lender works out.

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Questions people ask

Can I get a loan to buy a care home?

Yes. A care home purchase is funded with a commercial mortgage secured on the property and its trade, and a lender will want your experience in care or a registered manager who has it. It reads the home’s occupancy, fee mix, staffing and CQC rating. Your company must be registered with the CQC for the home before completion, so apply around the same time as the seller.

What is the NHS-funded nursing care rate?

From 1 April 2026 the standard rate in England is £267.68 a week. The NHS pays it directly to the care home for each resident assessed as needing nursing care, towards the cost of the registered nurse’s time. It is paid on top of the fee from the council or the resident, and the rate is reviewed each April.

Can a care home use invoice finance?

Yes. A care home that invoices councils for funded residents can borrow against those invoices, which shortens the wait between paying staff and receiving the council’s payment. The funder reads the council contracts and their payment terms. Self-funders pay the home directly, so their fees are not usually part of the facility. Invoice finance.

Do care homes charge VAT?

No. Residential care provided by a home registered with the CQC or the equivalent regulator is exempt from VAT as a welfare service. Because the care is exempt, the home generally cannot reclaim the VAT on its own costs, so building work and equipment cost the full price including VAT, and a loan has to cover it.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

Funding by sector

Commercial mortgages

A commercial mortgage is a long-term loan secured on premises the business uses or a building let to tenants.

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Development finance

Development finance pays for building or refurbishing property in stages, and is repaid when the finished scheme is sold or refinanced.

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Invoice finance

Borrowing against unpaid invoices, through factoring, discounting or single invoices.

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Business funding for nurseries

Nurseries fund extra places and new settings against an income that comes mostly from funded hours paid by the council.

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All business funding

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Start a funding search

Funding searches run on Swoop’s platform. Swoop Finance Limited is a credit broker and not a lender, and is authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting Ltd introduces businesses to Swoop and may receive a fee from Swoop when funding is arranged. Business funding is separate from the financial advice Equity & General Financial Services Limited gives through this website. Finance is subject to status, and a lender may ask a director for a personal guarantee.

Cover for a personal guarantee

If a lender asks you to guarantee the company’s borrowing, our advisers can advise on life cover for that debt.

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