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Practice refurbishment finance for private clinics

How private clinics fund a refit or extension: splitting equipment from building work, VAT on exempt services, lease issues and what lenders need to see.

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From around £10,000 to £500,000+Larger facilities available in suitable cases
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Sole traders to limited companiesPartnerships and LLPs too
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In short

Practice refurbishment finance pays for refitting or extending a private clinic without draining its cash reserves. Most practices split the project: removable equipment and plant on asset finance, and building work, finishes and professional fees on an unsecured or secured term loan. Lenders focus on how the works will raise capacity or income, a costed contractor quote with contingency, the lease term remaining, and the fact that most clinics cannot reclaim VAT on the build.

This page is for private clinics and independent practices planning a refurbishment: adding treatment rooms, upgrading to clinical-grade finishes ahead of a CQC inspection, fitting a procedure room for minor surgery or laser work, reconfiguring a reception after a merger, or bringing an ageing building up to modern accessibility standards. Clinical refurbishment costs more per square metre than an office refit and has less resale value, so how it is funded matters. Smart Funding Solutions is a broker, not a lender: we search our panel of 300+ lenders and arrange facilities from around £10,000 to £500,000+, with larger facilities available in suitable cases. This page sits within our healthcare practice finance hub. Pharmacies planning a consultation room or dispensary refit should start from pharmacy finance, and dentists from dental practice loans.

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What makes a clinical refurbishment different

A clinic refit is judged against infection prevention, privacy and access standards that an ordinary commercial fit-out never meets. The NHS England design guidance on flooring, walls, ceilings and sanitary ware (HBN 00-10) is written for NHS buildings but is widely used as the benchmark for private clinics too. In practice that means:

  • Welded sheet flooring coved up the walls, and cleanable wall finishes in treatment and procedure rooms.
  • Clinical hand-wash basins with the right taps and splashbacks, and separate cleaning and dirty utility space.
  • Mechanical ventilation for procedure rooms, laser rooms and any decontamination area.
  • Acoustic separation between treatment rooms so consultations stay private.
  • Step-free access, accessible toilets and door widths for wheelchairs and couches.
  • Secure storage for medicines, clinical waste and patient records.

These items are what drive cost overruns. A contractor who normally fits out shops may price the job lower and then meet the standards late, so lenders favour quotes from firms with healthcare experience.

VAT: the cost most clinics under-budget

Medical care provided by registered health professionals is generally exempt from VAT, as HMRC's guidance on health professionals and VAT (Notice 701/57) explains. A clinic making only exempt supplies cannot reclaim the VAT charged by its builder, so a quote that looks affordable before VAT becomes a fifth higher in cash terms. Clinics that also make taxable supplies, such as purely cosmetic aesthetic treatments or retail products, may be able to recover part of the VAT under partial exemption. Ask your accountant for the recoverable proportion before you set the loan amount, and borrow against the gross figure where VAT is a real cost.

Keeping the clinic trading during the works

Most practices cannot afford to close. Phasing the job room by room, working evenings and weekends, or moving some clinicians to temporary rooms keeps income coming in but adds to the contractor's price and stretches the programme. Build the lost appointments into your cash flow forecast and consider a small standby facility so that a delay does not force you to cut clinical hours or delay paying staff. Our page on healthcare practice working capital covers facilities that suit this.

Illustration: adding two treatment rooms

Illustration only, with round hypothetical figures and no rates. A private musculoskeletal and podiatry clinic is turning away bookings and plans to convert an unused storage area into two treatment rooms and a small procedure room. The budget is £150,000 including VAT, which the clinic cannot recover.

  • £35,000 of equipment, including a nail surgery chair, autoclave and two couches, goes on hire purchase.
  • £100,000 of building work, ventilation and fees is funded with a five-year unsecured term loan, supported by the clinic's two years of accounts and a waiting list showing demand.
  • The clinic keeps £15,000 of its own cash as a contingency rather than borrowing it, and its landlord consents to the alterations with a five-year lease extension.

Separating the equipment keeps the unsecured loan smaller, and the lease extension means the term loan ends well before the lease does.

Tax, trade-offs and when not to borrow

Some elements of a refit, such as certain plant, fixtures and integral features, may qualify for capital allowances, which reduce taxable profit; the general rules are set out in HMRC's guidance on claiming capital allowances. Tax relief does not make an unnecessary project worthwhile, though. Unsecured borrowing for fit-out usually needs personal guarantees, and a refit in premises with a short lease may leave you repaying for improvements you then have to remove. If the clinic's cash flow is already tight, a smaller first phase paid from reserves, or a landlord contribution in return for a longer lease, may be better than borrowing the full sum. If you are opening new premises rather than refitting existing ones, see clinic start-up finance.

Underwriting

What lenders look at for a refit

01

The payback logic

extra rooms, longer opening hours, new services, or higher-value treatments that a procedure room allows. A refit that only replaces tired finishes is still fundable, but on the clinic's existing profit alone.

02

Current trading

accounts, management figures and bank statements showing the clinic can carry the repayments even if the new capacity fills slowly.

03

A costed schedule of works

contractor quotes, a programme, and a contingency. Lenders are wary of budgets with no allowance for surprises in older buildings.

04

The lease

enough unexpired term to outlast the loan, landlord's consent for alterations, and a clear view of dilapidations at the end of the lease, since you may have to strip out what you are paying to install.

05

Regulatory fit

where the refurbishment changes how a CQC-registered service is delivered, such as adding surgical procedures or a new floor, lenders may ask whether a registration change is needed.

Checklist

Documents to have ready

  • Contractor quotes and a schedule of works, ideally from a healthcare fit-out specialist.
  • Equipment quotes, itemised separately.
  • Two years' accounts, current management figures and recent bank statements.
  • The lease and the landlord's consent, or title documents if you own the building.
  • A short note on what the refurbishment will change: rooms, services, capacity and expected income.
  • Your accountant's view on VAT recovery and capital allowances.
Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

OptionHow you repaySecurityOften used for
Unsecured business loan Fixed instalments, usually monthlyNo charge over assets; a personal guarantee is usually requiredGrowth, stock, tax bills and cash flow
Secured business loan Fixed instalments, often over a longer termA charge over property or other assetsLarger sums, property and refinancing
Revolving credit facility Interest on what you draw; repay and redrawVaries by lender and caseRecurring or uneven cash flow gaps
Merchant cash advance A share of future card takingsNo charge over assetsCard-taking businesses with uneven months
Asset finance Regular payments over the life of the assetThe asset being financedEquipment, vehicles and machinery
Invoice finance Settled as customers pay their invoicesYour unpaid invoicesBusinesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

Splitting the project between the right kinds of finance

Funding the whole project on one loan is simple, but usually not the cheapest or most flexible option. Separating the parts by what can be secured tends to work better.

Part of the projectFinance that often fitsWhy
Treatment couches, lasers, imaging, sterilisation units, ITHire purchase or leasing through asset financeThe asset is the security, which leaves other borrowing capacity free
Air handling units, specialist lighting, some fixed plantAsset finance with some lenders, or a term loanSome plant can be financed as equipment; fixed items often cannot
Building work, partitions, finishes, plumbing and feesUnsecured business loans or a secured loanLittle resale value, so it is funded on the clinic's trading strength
Loss of income and extra costs during the worksA working capital or revolving facilityKeeps wages and suppliers paid while rooms are closed

Clinics that own equipment outright can sometimes raise part of the budget through asset refinancing rather than new borrowing. Clinics that own their building may borrow against it through a secured facility, often at a lower cost than unsecured lending, but with the property at risk. Our general page on fit-out and refurbishment finance covers the non-clinical side in more depth, and specialist clinical kit is covered on medical equipment finance.

The broker’s view

How we help

We look at the full project, split it into the parts different lenders will fund on the best terms, and approach lenders that are comfortable with clinical fit-outs. We present the business case and the schedule of works together, and manage the process through to drawdown, including staged payments where the lender offers them. Lenders make the decision. It is free to enquire; any broker fee is disclosed separately before you proceed.

FAQs

Questions clients ask

Can I finance a refurbishment in leased premises?

Yes. Most clinic refits are in leased buildings. Lenders will want to see the lease, the landlord's consent to the works and enough unexpired term to cover the loan. A lease extension agreed alongside the works often helps.

Will a lender pay the contractor directly in stages?

Some will, releasing funds against invoices or a surveyor's sign-off, which protects both sides on a larger project. Others advance the full amount on completion of the loan, in which case agree stage payments with your contractor and hold the balance yourself.

Can I include new equipment in the same loan as the building work?

You can, but it is often better to keep equipment on separate asset finance. The equipment then secures its own agreement, and the unsecured loan for building work stays smaller and easier to place.

Do I need to tell the CQC about a refurbishment?

Routine redecoration usually does not require a registration change, but adding services, rooms at a new address or procedures outside your current regulated activities may. Check with CQC before the works start. If the refit is part of moving to premises you are buying, see healthcare premises finance.

How long does practice refurbishment finance take to arrange?

An unsecured refurbishment loan can often be decided within a few working days in straightforward cases, once the lender has your accounts and a costed contractor quote. Delays usually come from elsewhere: landlord consent for works in leased premises, final specifications and any property security. Arranging funding before you commit to a contractor avoids gaps. See our guide to fit-out and refurbishment finance.

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