Healthcare practice loans for private clinics and practices

Healthcare practice finance is usually available to private clinics and practices with registered clinicians, a settled regulatory position, at least a year or two of trading (or, for a new clinic, owners with a clinical track record) and income spread across enough patients and payers to cover the repayments. These are the points lenders probe hardest.

• Registration that does not transfer. CQC registration belongs to the provider, so a buyer taking over a practice's assets rather than its company shares usually needs to register in its own right before treating patients. The CQC explains who has to register; many therapy-led clinics are outside scope, but some treatments bring a practice in. Lenders will not release acquisition funds until the regulatory position is settled.
• Clinician dependence. If most income follows one surgeon, physiotherapist or optometrist, lenders ask what happens if that person leaves, falls ill or sets up nearby, and whether restrictive covenants exist.
• Professional registration. Lenders confirm clinicians are registered with the relevant body, for example on the HCPC register for physiotherapists and podiatrists, or with the GOC, GDC, GMC or GCC.
• Inspection history. A poor rating, enforcement action or open complaint is not always fatal, but it has to be explained with evidence of what has changed.
• Lease and fit-out. Clinical rooms with plumbing, ventilation or shielding are expensive to recreate. A short lease or a landlord break clause makes lenders cautious about funding the fit-out at all.
• Equipment life. Diagnostic and laser equipment can date quickly. Lenders prefer terms that finish before the kit becomes obsolete.

The security a lender takes depends on the product: clinical equipment secures its own finance, property secures a mortgage, and most other clinic borrowing rests on the owners' personal guarantees and a debenture over the practice company.

On hire purchase and leasing the funder owns the scanner, laser or couch until the agreement ends. Unsecured term loans for fit-outs or small acquisitions normally need guarantees from the principal clinicians. Larger acquisitions and hospital projects usually combine a debenture, a legal charge over any freehold and, where income depends on one or two clinicians, an assignment of key person life cover. Where security is thin, the scheme lending mentioned above may help. Our guide to personal guarantees covers what signing one means, and personal guarantee insurance can reduce the exposure.

Timescales range from a few days for straightforward equipment finance to several months for a practice acquisition, because each product carries different checks.

• Equipment finance: often a few days to two weeks once the supplier quote is in, longer for used or imported kit.
• Unsecured loans and working capital: typically a few working days to two weeks with accounts and bank statements ready.
• Premises: commonly 6 to 12 weeks, driven by valuation and legal work.
• Acquisitions: often two to four months, as funds are not released until due diligence is complete and any new CQC registration is in place.

Applying for registration early, and having an income split by payer ready, removes the most common delays.

Healthcare borrowing goes wrong in recognisable ways. Clinics buy equipment ahead of referral demand and carry the repayments while rooms sit idle. Owners fund a fit-out on premises with a short lease. A practice grows on one insurer's referrals and loses them. Before borrowing, test whether demand is already there, whether the lease outlasts the loan, and whether an equipment supplier's deferred payment or a phased fit-out would do the job. Personal guarantees are common on unsecured lending and should be read with independent legal advice. Our healthcare business loans guide covers common application mistakes.

Not every clinic decision needs a new loan: the main alternatives use the seller, your existing assets or HMRC's own payment arrangements.

If the pressure is a tax bill rather than an investment, HMRC Time to Pay may be cheaper than borrowing; our guide to Time to Pay versus a tax loan compares them.

• On a purchase, vendor finance or deferred consideration lets the retiring owner be paid partly from future profits.
• Asset refinancing can release cash from clinical equipment the practice already owns.
• Bringing in a clinical partner who buys a share of the practice, as described on our partner buy-in finance page, adds capital without the practice itself borrowing.