The healthcare sector in the UK operates on a mixture of public and private funding. Most healthcare services are provided through the government-funded NHS, but there is also a thriving private health sector – and many healthcare professionals operate on a mix of NHS contracts and private funding through independent sources.
This article is for healthcare professionals and investors who are growing or perhaps preparing to enter the sector and may be unsure of the best sources of funding. You may be a dentist serving both NHS and private customers, a consultant or medical specialist with a private practice, or the owner of one or more private care homes. There are many lucrative service niches in the healthcare sector, each with their own challenges.
With the exception of government funding – which we will review in another blog – what funding sources are available to help you establish your business on firm financial footing?
1. Personal Sources
As with start-ups in other sectors, many new healthcare businesses use personal resources to fund their business, sometimes supplemented by loans or gifts from friends and family. This can be deemed as an unstable source of funding, as it increases personal financial risk and can place a strain on relationships if not managed properly.
2. Banks & Private Specialist Lenders
Banks are regular creditors to the healthcare sector through overdrafts, credit cards, loans and mortgages. There is also a specialist lending sector composed of venture capital firms, crowdfunding organisations, wealthy individuals, independent finance providers and charitable trusts. These specialist lenders offer a wider range of financial products, including medical asset finance and factoring. Some also provide commercial mortgages for care home acquisitions, GP mergers, property redevelopment and other purposes.
The healthcare lending sector is diverse and it can be confusing to know where to start and how to make a successful application. We recommend consulting an impartial broker before delving into the alternative finance market.
3. Purchase Order Finance
Non-prescription medical products can often be acquired through purchase order finance. In these agreements, a lender agrees to pay a supplier upfront to fulfil a specific purchase order. The amount is then repaid over a fixed period, with the inclusion of interest and fees. This allows new businesses to stock up on inventory without depleting cash reserves, and helps manage cash flow for small businesses.
4. Local Authority Funding
Some local authorities run funds to support local businesses, which may be of use to healthcare practitioners. Loans may be available to acquire or develop property, purchase assets or fuel expansion.
UK Healthcare Funding Explained
Raising finance for the healthcare sector can be complicated, and requires a different approach to other sectors. Before making any kind of funding application, download our free Guide To Finance & Funding For The Healthcare Sector. The guide explains the main types of funding available to healthcare businesses, the advantages of each, mistakes to avoid and how to make a good application.
You should also consider using a specialist broker such as Business Finance Solutions Ltd, who can help guide you to the most appropriate financial products. Call 0345 5050 888, or email email@example.com to find out more.