How to start a domiciliary care agency in the UK
To start a domiciliary care agency in England, set up a company, register with the Care Quality Commission for personal care, appoint a registered…
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Care agency finance for domiciliary and home care providers
How home care agencies bridge the gap between weekly carer payroll and slow council payments, fund growth and buy agencies, and what lenders check.
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In short
Supporting care agencies at every stage.
Domiciliary care agencies usually borrow because carers are paid weekly or monthly while councils and NHS commissioners pay weeks later, often after visit records are reconciled.
Invoice finance against commissioner invoices is the most common answer, alongside working capital loans for growth and acquisition finance for buying an agency. Lenders focus on the CQC rating, how much income depends on one council, and payroll compliance, including paying for travel time.
The operating cycle
Where finance fits into your care agency
Cash leaves the business at every stage before it comes back. Each stage below is a point where the right facility can carry the gap.
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- 01
Win work
Orders, contracts or customers secured.
- 02
Buy in
Stock, materials and equipment paid for up front.
Asset finance → - 03
Pay people
Wages and suppliers paid on time.
Working capital → - 04
Deliver
The work is done or the goods are sold.
- 05
Get paid
Customers pay, sometimes weeks later.
Invoice finance → - 06
Tax
VAT and Corporation Tax fall due.
HMRC loans → - 07
Invest
Growth, a new site or new equipment.
Business loans →
A transaction we arranged
£33,000
£33K for a care staffing company.
Staffing firms pay wages before customers pay invoices. The lender needed to understand that cash-flow cycle.
Read the transaction- Sector
- Care staffing
- Structure
- Business facility
- Outcome
- £53,975 across 3 facilities
About care agency finance
Specialist knowledge. Better outcomes.
This page is for owners and directors of home care and domiciliary care agencies.
This page is for owners and directors of home care and domiciliary care agencies, including live-in care providers, whose cash is squeezed between payroll and slow-paying commissioners, or who want to grow or buy another agency. Smart Funding Solutions is a broker, not a lender: we search our panel of 300+ lenders, including invoice finance providers that work with care, and arrange facilities from £10,000 to £20 million. It forms part of our wider SME loans by sector guidance.
Setting up a new agency? Our guide on how to start a domiciliary care agency covers registration, costs and funding the first months.
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Explore this section
In this section
More detail on specific needs within this topic.
Funding needs
Funding options for care agencies
Choose the need, and we’ll show you how lenders usually structure it.
Finance options for care agencies
01
Invoice finance
Invoice finance advances a proportion of each invoice as soon as it is raised, and the facility grows as the agency delivers more hours. Councils are excellent debtors, so the question for the funder is not whether the invoice will be paid but when, and whether part of it will be disputed. Factoring includes credit control; confidential invoice discounting leaves collection with you. Funders usually cap how much of the ledger one debtor can represent, which matters if one council buys most of your hours. Our page on high-concentration invoice finance explains how that is handled. Private clients billed individually are less suited to invoice finance, so agencies with a large self-funder base often combine it with other borrowing.
02
Working capital loans and revolving credit
Working capital loans fund a defined growth step, such as mobilising a new framework area or a recruitment drive. A revolving credit facility suits recurring timing gaps like the April uplift delay, because you draw only when needed.
03
Acquisition finance
Buying another agency adds hours, carers and commissioner relationships in one step. Acquisition finance is usually a term loan repaid from the combined agency's profits. The CQC route matters: buying the shares of the registered company normally keeps the registration in place, while buying the business and assets needs the new provider to register. The CQC explains the options in its guidance on buying or transferring a domiciliary care agency.
04
Vehicles and systems
Rural agencies sometimes run pool cars so that carers without their own vehicles can work. These, and rostering or care management systems, can be spread through vehicle and fleet finance or other asset finance.
Agencies that also supply temporary care staff to other providers face the same weekly payroll gap as staffing businesses, which our page on recruitment and staffing agency finance covers.
Why home care agencies run short of cash
A home care agency sells hours of care, and almost all of its cost is the wages of the people delivering them. The cash problem comes from the order in which money moves.
- Payroll comes first. Carers are paid weekly, fortnightly or monthly for visits already made, plus mileage.
- Councils pay in arrears. Many local authorities pay four-weekly or monthly in arrears, and often only after electronic call monitoring data has been matched against the commissioned care plan. Missed or short visits are queried, and the queried amount waits.
- New packages cost before they pay. Taking on a hospital discharge or a new framework area means recruiting, vetting, training and paying carers weeks before the first remittance.
- April is a pinch point. The National Living Wage rises each April, but council fee uplifts are sometimes confirmed late and backdated. The April 2025 rise in employer National Insurance added to the same squeeze.
- Winter demand. Hospital discharge pressure raises volumes just when staff sickness is highest and overtime costs rise.
Illustration: the payroll gap on a council contract
Illustration. A hypothetical agency's weekly payroll for council work is £20,000. The council pays four-weekly in arrears and typically settles about two weeks after the period closes. By the time the first remittance arrives, the agency may have paid around six weeks of wages, roughly £120,000, from its own cash. Every new package widens the gap. An invoice finance facility advances part of each four-weekly invoice when it is raised, so the gap shrinks to the portion not advanced and any queried visits.
Risks and trade-offs
- Invoice finance terms. Many facilities have minimum periods and notice or termination fees. Read the exit terms as closely as the advance rate.
- Borrowing will not fix a rate below cost. If a contract pays less per hour than the hour costs to deliver, finance only speeds up the losses. Negotiate the rate, or reduce hours on that contract.
- Re-tender risk. Losing a framework can remove a large share of income at once. Lenders will ask what happens if that occurs; so should you.
- Personal guarantees are usually required, including on invoice finance, where they often cover warranties about the invoices.
- Tax arrears. For a VAT or PAYE bill, compare borrowing with HMRC Time to Pay; see HMRC loans. Most care services are VAT-exempt, but staff agency or other supplies may not be.
Underwriting
What lenders look at in a home care agency
01
CQC registration and rating
for each location, and any enforcement history. The CQC sets out what it expects from providers applying to register.
02
Contract type
framework, block or spot purchasing, and when each contract is due for re-tender.
03
Hours delivered per week
over the last year, and the trend.
04
Rate per hour against cost per hour
, including travel, mileage, training and on-costs.
05
Minimum wage compliance
Travel between visits usually counts as working time; underpayment claims can reach back years. See GOV.UK guidance on working hours for which the minimum wage must be paid.
06
Workforce stability
turnover, vacancies and reliance on sponsored overseas workers, given that recruiting new care workers from overseas has been closed off.
07
Concentration
how much income comes from a single council.
Checklist
Documents you will need
- Year-end accounts plus management accounts to the latest month
- Aged debtor and creditor reports, with disputed items identified
- Copies of council and NHS contracts or framework agreements, with rates and payment terms
- Recent remittance advices showing how and when each commissioner pays
- Hours delivered per week and payroll reports
- Your CQC registration certificate and latest inspection report
- For an acquisition: heads of terms, the seller's accounts and the CQC plan for the change of ownership
Where your income comes from and how lenders view it
| Payer | How it usually pays | How lenders see it |
|---|---|---|
| Local authority framework or spot contracts | In arrears, after visit data is reconciled | Very low risk of non-payment, but slow; concentration is the main concern |
| NHS continuing healthcare | In arrears, by the commissioning body | Strong payer; packages can end at review |
| Direct payments and personal budgets | By the client or their representative | Smaller individual debts, more administration |
| Private self-funders | Often monthly, sometimes in advance | Better margins; payments stop when care ends |
| Live-in care | Usually private, weekly or monthly | Higher value per client; relies on a small pool of live-in carers |
Agencies that sell into NHS commissioners as well as councils may find our guide to funding NHS contracts useful.
The broker’s view
How we help care agencies
We start with your payer mix and payroll cycle, then work out whether the need is timing, growth or an acquisition. We approach lenders on our panel with a care book, set out the advance, fees, notice periods and guarantees for each offer, and stay involved to completion. Lenders make the decision. It is free to enquire; any broker fee is disclosed separately before you proceed. Providers of accommodation-based care should also see our pages on care home finance and supported living finance.
FAQs
Questions clients ask
Can a newly registered care agency get invoice finance?
Some funders will support a new agency once it has signed contracts and has started invoicing, usually with a lower limit at first. Without trading history, expect the directors' experience in care and personal guarantees to carry more weight.
Does invoice finance work if the council pays through a portal or self-billing?
Usually, yes. Funders are used to council portals, purchase order numbers and self-billed remittances. The important thing is a clear audit trail from visit data to the amount the council accepts, so disputed visits can be identified quickly.
Will a lender fund an agency that relies on sponsored workers?
Many will, but they look at how many carers are sponsored, whether the sponsor licence is in good standing and how the agency will replace staff as visas end. Heavy reliance on sponsorship is treated as a workforce risk.
Is a care agency funded like a recruitment agency?
There are similarities, as both pay staff before clients pay, but lenders assess care differently because of CQC regulation, council payment processes and the vulnerability of the people being cared for. Our page on recruitment finance covers staffing agencies that supply temporary workers.
Can I get care agency finance to buy another home care agency?
Yes, care agency finance can fund the purchase of another domiciliary care agency, usually through an acquisition loan based on the target's sustainable profit, sometimes with deferred payments to the seller. Lenders look at the target's CQC rating, commissioner contracts, staff retention and how the registration will transfer. You will normally need a cash contribution and a personal guarantee. Our page on acquisition finance explains how purchases are structured.
Can I get instant quotes for care agency finance?
Instant Quotes shows which lenders on our panel are likely to fit your care agency, with no credit search. The lender then reviews your commissioner contracts, invoices and CQC registration before confirming terms.
Where can I check CQC rules if a care agency changes hands?
The CQC explains what registration is needed when a registered care business is bought, sold or transferred (CQC: buying, selling or transferring). Lenders funding a purchase usually want registration settled before completion; see acquisition finance.
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