Introduction: Why Specialist Healthcare Funding? How To Apply For Finance
     What is healthcare funding?  
3 Types Of Finance For The Healthcare Sector Why Choose Business Finance Solutions (UK) Ltd?
     1) Commercial mortgages      UK-wide network of specialist healthcare funders
          Advantages      Relationship Director
          Choose a commercial mortgage for...      Find out more
          Repayment terms  
     2) Asset finance Glossary Of Key Terms
          Eligible Assets  
          Hire purchasing or leasing?  
          Asset refinance  
     3) Invoice finance  
          How invoice finance works  


Introduction: Why Specialist Healthcare Funding?

Healthcare providers have a specific set of funding needs, so benefit from tailored solutions. As a specialist independent finance broker, Business Finance Solutions (UK) Ltd gives you access to hundreds of niche lenders and major banks across the UK – with personalised products to meet your borrowing needs.

The right finance can help you acquire new premises and equipment, expand your market share from insurance companies, individuals and the NHS, and attract the best medical specialists.

This guide explains the three main types of finance used by healthcare providers, how the funding is used and what you need to apply. For strong businesses there are a number of options including a range of secured and unsecured mortgages or loans as well as cash loan management facilities.

Whether you are new to the healthcare sector or an experienced provider, this guide highlights the key aspects to look out for when sourcing funding and how our experienced team can save you time and money.

The Healthcare Section Finance and Funding Guide 1

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What is healthcare funding?

For the purpose of this guide, ‘healthcare funding’ is any type of finance arrangement taken out by businesses in the healthcare sector to fund a need specific to their industry.

Borrowers may include:

  • GP surgeries
  • Community pharmacies
  • Private residential care homes
  • Private hospitals
  • Dental practices
  • Specialist clinics and therapy providers
  • Home care providers
  • Veterinary surgeries
  • Children’s nurseries
  • Opticians/optometrists
  • Special needs schools


The Healthcare Section Finance and Funding Guide 2-3


As healthcare is a diverse sector covering a wide range of businesses, funding needs are equally varied. Through a detailed analysis of your market, we can find the right financial products to:

  • Help with mergers and acquisitions
  • Acquire new medical equipment
  • Purchase new surgeries and clinics
  • Expand or convert an existing property
  • Acquire drugs and other medical products
  • Help set up and structure a new business
  • Assist with cash flow, growth and cost savings

As we go through this guide we will explain how each of the three types of finance address these and other needs. If you have any questions while reading and would like to speak to one of our advisers directly, please call 0345 5050888.


BFS_ The Healthcare Section Finance and Funding Guide 3


3 Types Of Finance For The Healthcare Sector

Most of your healthcare funding requirements can be met through either a commercial mortgage, asset finance or invoice finance. Not all lenders offer the same terms, so it helps to work with a specialist broker with proven knowledge of the healthcare sector.

Let’s look at each type of agreement in turn:

1) Commercial mortgages

Commercial mortgages are a convenient source of finance for purchasing new premises, refurbishments and capital raising.

  • You can take out an unsecured loan of up to £1 million (borrowed amount depends on the lender, your experience, business performance, income forecast and credit rating).
  • Secured mortgages can be 100% the value of a property. Security can be an asset owned by your business, or the personal home/property of a director or partner.
  • There are options to finance lease hold properties up to 70-80% depending on the given sector.
  • Flexible repayment terms on freehold mortgages of 7 to 30 years.
  • Lower interest rates than other commercial loans. Fixed rate, standard variable rate or base rate loans are available. The choice depends on your cash flow, the fixed rate term, redemption cost and market trends. Average premiums for freeholds are the Bank of England Base Rate + around 3%. Leasehold mortgages may be charged at a higher rate.
  • Capital repayment holidays of up to 7 years available from some lenders.
  • Capital gains – more cost-effective than renting your premises.
Choose a commercial mortgage for...

Any healthcare provider who wishes to own, extend or refurbish their premises may benefit from a commercial mortgage:

Acquisitions – Expand your business by adding new purpose-built pharmacies, care homes or clinics to your portfolio, or convertanother property for healthcare purposes (e.g. an above shop first-floor flat into a dental practice).

New builds – Construct new GP surgeries or multipurpose medical centres (common for merged practices).

Extensions – Finance extensions to your existing building to facilitate growth in patient numbers or diversification of your business.

Upgrades – Restructure an existing property to accommodate specialist equipment or services. Your mortgage may be taken out in conjunction with a bridging loan or asset finance.

Refinancing – Unlock the capital value of your property for a range of purposes:

  • Extend repayment terms to reduce monthly payments or lower interest rates.
  • Bring new doctors or medical professionals into partnership without needing to fall back on personal funding.
  • Facilitate retirement plans by allowing partners to release equity from shares in a property.
Repayment terms

Most commercial mortgages have terms of 7 to 30 years. There are options to reduce the margin on loans by use of a part amortising facility (details available on request).

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2) Asset finance

Asset finance is a cost-effective, low-risk way of acquiring high value medical equipment or fitting out a new premises with specialist installations. Whether you are a start-up dental clinic or a large private hospital, asset finance gives you access to the latest medical technology, and can help optimise cash flow while you prepare for growth.

Asset finance payments cover the value of the equipment plus interest and any fees charged by the lender.

Eligible assets

You can take out asset finance for a wide range of medical equipment, as well as non-medical assets used to support your practice, for example:

  • Surgical equipment and instruments
  • Diagnostic scanners – e.g. MRI, CT and x-ray devices
  • Dental chairs and surgical equipment
  • Corrective laser eye therapy machines and other optometric equipment
  • Operating theatres
  • Decontamination equipment
  • Ambulances
  • Pharmacy robots/automation systems
  • Affordable, fixed monthly payments agreed in advance.
  • Flexible 1 to 5 year contracts (depending on the life-cycle of the asset).
  • Deduct finance lease payments from your corporation tax liability.
  • Option to upgrade or exchange your asset at end of term – no risk of being tied to obsolete medical equipment.
  • Your asset finance monthly repayments are often lower than taking out a business loan to purchase the asset, with the cash flow advantage of not having to deplete working capital.
  • Lower entry barrier than commercial loans, with many start-up businesses being eligible for asset finance.
  • As the finance is secured against the asset itself, additional security is not usually required.
Hire purchase or leasing?

One of the attractions of asset finance is there is no need for capital outlay or security. Instead, the new asset is hired or leased from a leasing company.

  • With hire purchase agreements, you acquire ownership of the asset at the end of the payment term, sometimes after payment for an Option-to-Purchase fee.
  • With leasing, the asset is returned to the leasing company after the contract period - or exchanged for a newer version of the asset, in which case the lease continues on similar terms.
Asset refinance

You may wish to increase liquidity by using a medical asset you already own as collateral for a cash loan up to the resale value of the asset. This is a good way to improve cash flow, as a form of bridging finance when waiting for a commercial mortgage or longer term loan, or as an alternative to invoice finance.

3) Invoice finance

Invoice finance is a short-term secured borrowing arrangement that helps bridge cash flow gaps, progress orders and growth plans, and release working capital for other purposes.

How invoice finance works

In invoice finance you assign your unpaid invoices to a bank or specialist lender, who immediately releases a prearranged percentage of the invoice value. In the healthcare sector, invoice finance is widely used by pharmacies to increase value from NHS prescription contracts.

To receive payment for NHS prescriptions, a pharmacy must submit a monthly FP34C claim form to the NHS Prescription Pricing Division. Reimbursement can be unpredictable and have an impact on cash flow.

Invoice finance helps you unlock up to 90% of the value of your FP34C - often in as little as 24 to 48 hours. The remaining balance, with service fee and interest (cost of funds) deducted, is released back to you when the invoice is paid by the NHS.

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There are two types of invoice finance:

1) Factoring

In factoring, a finance company takes on responsibility for your complete sales ledger, as well as collecting invoice payments from your customers. It is great for small healthcare practices and pharmacies without a dedicated credit control team. Approval for factoring depends on your customer’s credit rating, which is rarely an issue for the NHS and large healthcare suppliers.

2) Invoice discounting

With invoice discounting, the lender gives you a short-term loan secured on the invoice, with you retaining control over your sales ledger and collections. It’s up to you to chase your customer for payment and pay the agreed fees to the finance company. The cost of invoice discounting is usually less than factoring.


Invoice finance isn’t just for pharmacies; any healthcare business can use factoring or invoice discounting to release funds tied up in unpaid invoices.

  • Often cheaper than business loans, overdrafts and credit cards.
  • Provides a scalable release of working capital, reducing accrued debt and increasing monthly outgoings.
  • Increased cash flow for day-to-day expenses, growth and investment.
  • Faster payment of invoices.
  • Improved control of cash flow.

The Healthcare Section Finance and Funding Guide 4


How To Apply For Finance

When you apply for finance, lenders will need to see various documents relating to your cash flow and business prospects. At BFS (UK) Ltd we have high-level access to credit policy underwriters when preparing funding applications. This allows us to present strong cases on your behalf to the best lenders.

You’ll need to show:

  • Complete details of NHS contract and performance indicators. This is the main basis used by lenders to value the Good Will of your business.
  • Director/partner payslips for the last three months or your latest P60 with six months of personal bank statements if you are a contractor.
  • Business asset and liabilities statement.
  • Three years of business accounts (if applicable).
  • Business management figures.
  • Six months of business bank statements.

The Healthcare Section Finance and Funding Guide 5

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Why Choose Business Finance Solutions (UK) Ltd?

At Business Finance Solutions (UK) Ltd we arrange tailored funding solutions for practitioners and service providers in the healthcare sector, sourcing the best terms and rates from hundreds of specialist lenders. Our team combine over 100 years’ experience in several finance disciplines, ranging from commercial loans to NHS contract law. Our brokers provide an informed approach to funding, personalised to your unique needs.

Many of the healthcare providers we work with are family-owned businesses. Other customers range from large hospital groups to small private clinics, care homes and retirement villages.

Getting the best funding deal involves knowing who to approach and what financial products are available for different borrowing needs. This is especially true of the healthcare sector, where funding requirements are often very specific, and may not be covered by standard commercial finance arrangements.

UK-wide network of specialist healthcare funders

We have a wide contact portfolio of trustworthy healthcare investors and lenders, and a reputation for linking borrowers with the most appropriate funding source. We guide you through the complete funding process, advising on the right financial product for you and helping you make a successful application.

Working closely with underwriters, solicitors, surveyors and accountants, we take care of the contractual side of your funding arrangement and ensure legal obligations are met on each side.


Relationship Director

It can be difficult to pinpoint the right funding option for your business, which is why we provide a personal account manager to help you find the best deals and get the best returns.

Your Relationship Director is available for one-to-one advice, to draw up revenue forecasts for specific projects, help you assess risks and decide between different funding options. We don’t rely on computer scoring to recommend products, but work directly with underwriters – drawing on decades of experience with individual lenders in the healthcare sector.

When you pursue healthcare funding through Business Finance Solutions (UK) Ltd, it’s not a case of filling an online calculator and pressing ‘send’. We make sure that our clients understand every option so they can make an informed, business-focused choice.

Find out more

Thank you for downloading this guide! For more information about our financial brokerage services or to arrange a free consultation, please get in touch by phone or email today.

T:  0345 50 50 888

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Glossary Of Key Terms

Arrangement fee

A charge applied by a lender to reserve money for you when arranging a commercial mortgage or loan.


The legal process of transferring ownership of a property from one owner to another.

Debt Service Coverage Ratio (DSCR)

The proportion of your cash flow required to service your debt repayments, given as a percentage of monthly sum to overall cash flow.

Forced Sale Value (FSV)

The forced sale value is the basic value of an asset or property if it were to be sold immediately.

Loan-to-Value (LTV)

The loan-to-value shows the loan amount compared to the total value of the property or asset. The LTV shows how much of a deposit is needed from the borrower and how much the lender will provide, given as a percentage of the total value.

For example, a commercial mortgage provider offers a 70% LTV on a £200,000 property. In this case the lender will fund the acquisition to the figure of £140,000, while the remaining 30% – or £60,000 – is payable by the borrower as a deposit.

The LTV is a key factor when considering the risk associated with different types of finance.

Open Market Value (OMV)

The OMV is the current market value of a commercial property or health care asset. Prices fluctuate over time, so the OMV can be higher than the forced sale value.

Pharmacy Funding (PF)

Reimbursement received by private pharmacy owners for services undertaken for the NHS under a pharmacy contract – i.e. fulfilling NHS prescriptions. Pharmacy funding consists of fees and allowances (i.e. the cost of medications) and retained buying margin (the profit permitted to the pharmacy from transactions).

The PF is determined annually by the Department of Health and Social Care, in negotiation with the Pharmaceutical Services Negotiating Committee (PSNC), a professional organisation representing NHS community pharmacies.

Pharmacy Wholesale Loan Scheme

A credit scheme offered by pharmacy wholesalers to community pharmacies. In return for purchasing a specified level of stock, the wholesaler will guarantee a loan on competitive terms, usually provided by a mainstream bank.

Planning Permission (PP)

If you are building a new healthcare facility or surgery, or making changes to an existing property, your local authority may need to grant planning permission for the work to go ahead. Some changes are covered under permitted development and do not require planning permission.

Standard Variable Rate (SVR)

A commercial mortgage or loan provider may set their own variable interest rate, which is called the Standard Variable Rate. This may be different to the current Bank of England Base Rate.

Units of Dental Activity (UDA)

NHS dentists in England and Wales are paid according to their Units of Dental Activity. The value of each UDA is determined by the local NHS Primary Care Trust, but the national average is £20 per UDA. UDA value is based on market demand – the fewer NHS dentists are in an area, the higher the UDA.

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