Healthcare Funding Case Studies and Previous Deals

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Dentists : Pharmacists : Doctors : Care Homes : Vets : Opticians : Medical Consultants

DENTISTS

Sterling arrange unsecured funding approaching £1M for single dentists to purchase predominantly private practice.

Funding arrange for a single dentist to purchase a muliti chair PREDOMINANTLY PRIVATE PRACTICE where UNSECURED FACILITIES were approaching £1,000,000. Competitive terms and interest rates obtained. Facility has been drawn".
A challenging deal at any time but particularly given the current situation where banks are less comfortable with lending significant unsecured funds and particularly for private practices where they generally require larger cash deposits. Our customer is also a partner at two other practices. It was not necessary to involve those in this funding arrangement

The purchaser has worked as an associate at the target practice for over 7 yrs and has an excellent relationship with the practice patients and staff. He is very well qualified with a passion for both dentistry and his patients an. With his gentle and caring manner he is able to put even the most nervous patients at their ease.

General and Cosmetic dentistry along with implant surgery are his speciality.

Get in touch if you are looking to buy a dental practice.

100% funding dental practice purchase

Predominantly NHS dental practice bought by a reasonably experienced dentist looking for 100% finance of well in excess of £600k. Funding approved against charge over freehold surgery and an investment property, both where full equity (as against written down security value) was allowed for security and interest rate purposes over a 25 year term. Significant unsecured element remained a feature.

100% funding dental practice purchase

100% funding arranged for two dentists: One experienced and currently a practice owner; the other much less so with no experience of running a practice. Purchase of a mixed dental practice, including freehold. Quite significant unsecured element and tight on stress tested serviceability. Loan repayable over 25 years. Full property equity allowed for security and interest rate purposes.

100% funding for the purchase of a predominantly NHS leasehold dental practice

100% funding completed for the purchase of a leasehold dental practice with a moderate to good NHS contract with scope to build and expand a private patient base. Negotiated interest rate margins well below standard unsecured rates.

100% funding to fund the relocation of leasehold dental practice to new leasehold premises

100% finance arranged to fund the relocation of a leasehold dental practice into new and significantly larger leasehold premises. Facility included picking up current bank borrowing, relocation costs, fitting out and new/updated equipment

100% funding for dental surgery premises

100% funding arranged for an experienced dentist to purchase the freehold to his practice. Security was limited to the target premises and interest rates were based on the full value of the premises as full security.

100% funding for dental partnership where one partner is non-resident

100% funding for the purchase of a predominantly NHS leasehold dental practice but with good opportunity to build a private patient base. All partners were experienced dentists but not necessarily within the UK. One has recently been given UK citizenship. Significant unsecured element.

100% funding for purchase of a freehold predominantly NHS dental practice where we were asked to find funding better than the terms that were offered by another lender

100% funding was sought by a dentist to enable them to purchase a freehold predominantly NHS dental practice where the freehold value was relatively small and there would be a significant unsecured element to the deal. Customer had already secured finance and wanted us to get them a better deal. We were aware that the customer would show the information to the lender and unusually (because we will not knowingly put ourselves and our lenders to the cost of taking forward an application simply to enable customers to get their current lenders to reduce pricing. We do not get paid unless we arrange finance which then goes to drawdown) we agreed to take on the request. We were able to secure the funding at a substantial discount to that offered to the customer, and their lender could/would not come down to the level obtained.

100% Funding for relocation and expansion of NHS practice

100% funding was sought to enable a dentist to move from small short leasehold premises to large very long leasehold premises and increase the surgeries fourfold. This included additional funding for relocation, fitting out and new equipment for 3 surgeries together with refinance of current bank borrowing.

100% funding requested to expand number of dental practices

100% funding was requested and approved for a dental partnership to purchase adjacent premises to expand current surgery together with 100% funding to purchase an additional two surgery dental practice located in the next village and for the purchase a further small dental practice in another local village. Significant borrowing with relatively high written down unsecured element. Interest rates were arranged in line with fully secured terms.

Dentist Squat (Warwickshire - £200k)

A dentist came to us for healthcare funding to enable her to set up a dental squat. She was concerned for the healthcare of the town and particularly the lack of dentists and dental care. Funding was always going to be challenge as she was a relatively inexperienced dentist. There was no PCT contract available and the dentist had to rely on private patients to fund her business.

To get a bank on board and prepared to provide funding for a dental squat, it was necessary for the dentist to have a strong business plan and we helped her to put it together. It was made all the more challenging in that the dentist required 100% funding of £200,000.

In the end, this dentist got her dental funding by way of a package from a combination of specialist healthcare lenders, and at a level that gave immediate support and headroom to ensure she had sufficient funding for the first two years.

Single Dentist (Devon - £550,000)

A relatively experienced dentist, but with just over two years experience as an associate in the UK, approached us for healthcare funding to enable him to purchase a dental practice and freehold surgery premises totalling £550,000; split £350,000 property and £200,000 Goodwill, F&F and equipment.

Because he did not have two years accounts available, but could produce one years figures plus 12 months earning schedule, we were able to help him buy the practice once the target PCT confirmed their agreement to add him to their performers list and later the providers list - the premises were leased.

However, after hi first 12 months audited figures confirmed he could service the initial funding plus additional funding requirement for premises, we assisted with the acquisition of surgery premises.

Dental partnership (Staffordshire - £790,000)

A recently married husband and wife, fully qualified as general dentists and both with special interests; one in implants and the other orthodontics (neither on the specialist register), approached us for finance. They required healthcare funding to enable them to jointly purchase a dental practice including freehold premises totalling £790,000. Dental surgery premises were £285,000. The dental practice business was £505,000. Mixture of NHS and private with GDS contract and ODS contract.

Whilst they could afford to make a considerable cash contribution, they sought 100% funding so as to use their spare cash to put towards a family home.

Funding was made available because they were both high gross earners, buying a mixed and profitable practice with good PCT contracts and strong private capitation scheme incomes.

Dental partnership buy in (Lancashire - £325,000)

Healthcare funding of £325,000 repayable over 25 years was arranged for a dentist buying into a predominantly NHS practice. This was to cover a share of the freehold practice premises together with 50% of goodwill, F&F and equipment.

Given the dentists age, experience and means - 100% funding was available at the time. No personal security was requested from the lender.

Dentist purchase of a multi surgery practice (West Mids - £1.75m)

Healthcare funding was approved for a dentist to purchase a 5 surgery dental practice. This was a mixed dental practice with significant NHS contract and private capitation income. The price included dental surgery freehold premises, with room for additional surgeries, goodwill, F&F and equipment. 100% funding was required.

Very profitable dental practice. Highly experienced dentist with significant means; clear, able and willing to support the funding request with additional security of an investment property and put the family home behind the purchase and his judgement.

Dentist single purchase (Yorkshire - £1.47m)

Healthcare funding was approved for a dentist buying a multi dental surgery practice in Yorkshire. This was a mixed dental practice with significant NHS contract and private capitation income. Price included freehold dental surgery premises, goodwill, F&F and equipment. Very profitable dental practice.

Highly experienced dentist with significant means who had 15% cash contribution and used an investment property to give additional security behind the funding.

Multi Dental Surgery (East Midlands - £895k)

We were introduced to a highly experienced dentist who already owned two successful predominantly NHS multi dental surgery practices in the East Midlands. He required funding to purchase two additional NHS surgeries.

Additional funding of £895,000 was obtained for freehold dental surgery premises, goodwill, F&F and equipment. Both target practices were under performing, but in an experienced and successful dentist's hands could be turned around. Room to grow private patient list, and PCT had agreed additional funding given the dentist involved.

Because of current borrowing relating to dental surgery purchases, 100% funding was a challenge. The dentist and his family were comfortable in backing him and agreed to a second mortgage over the family home by way of commitment to the additional healthcare funding which was approved at the level requested.

Dental practice purchase (London - £1.75m)

A group of three highly experienced dentists who specialised in orthodontics, implants and periodontics purchased a 5 surgery dental practice on the outskirts of London for £1.75M including freehold premises e/v £600k goodwill F&F and equipment.

Large NHS contract in an affluent area. All partners were high fee earners and two partners have good to very good personal assets. All aged over 35.

100% healthcare dental funding sought over a 25 year term and given the dentists experience, background and means - funding was approved.

Dental practice purchase (South Coast - £967k)

Healthcare funding requested by two dentists to purchase 2 mixed, under-performing dental practices on the south coast to add to the 2 predominantly NHS dental practices they already owned.

Very experienced dentists with good personal means and good track record in turning under performing dental practices into somewhat larger and more profitable dental practices.

All practices, owned and target, within reasonable travelling distances and as such could be comfortably managed. Healthcare dental funding of £967,000 sought and approved for freehold dental surgery premises together with goodwill F&F and equipment

Dental practice purchase – (N Wales - £260k)

Experienced dentist in North Wales generating gross fee income of some £280,000 sought healthcare funding of £260,000 to purchase a leasehold private dental practice which was set up over 20 years ago. No LHB contract nor one expected to be forthcoming, but good private patient base exceeding 1,500 patients.

This was a profitable dental practice but not exceptionally so, with room for expansion and improvement. We obtained healthcare funding of £240,000 to purchase the dental practice.

Mixed practice partnership buy in  - (London - £540k)

We were contacted by two dentists who required funding for a 3 surgery mixed dental practice in London. One experienced high fee earning dentist together with a relatively young and inexperienced dentist, but whose first two years as an associate had shown well above average fee earning. Modest PCT contract with little opportunity for additional funding.

Good private capitation scheme. Profitable practice run by one principle and two part time associates. Good demand in the area. Ideal for two progressive dentists.

Lease hold premises. Cost £540,000 for 3 surgery (with room for a forth) mixed dental practice including lease, goodwill F&F and equipment (recently refurbished two dental surgeries). To be run as an expense sharing practice with the younger dentist plus associate spending most of the time at the practice.

A challenging proposition where healthcare funding of 100% for the older and more experienced dentist with good means was not an issue, but level of unsecured lending to younger dentist with limited track record and little means meant a leap of faith by the funder. In the end, facilities were approved for both dentists.

Orthodontic dental practice – (Midlands - £280k)

We were approached by an orthodontist for healthcare funding to set up a private general and orthodontic dental surgery. Experienced husband and wife team. Initially to set up a squat with two private dental surgeries, the premises had room for expansion for two more surgeries. To purchase long lease and pay nominal ground rent.

The PCT gave no encouragement about either a GDS or ODS contract.

90% finance was approved over a 15 year term

PHARMACIES

East Coast - £465k

Healthcare funding sought by experienced single pharmacist to purchase pharmacy, goodwill and small freehold pharmacy premises on the east coast. Total facilities £465k 80% LTV partly guaranteed under a wholesaler scheme. Approved.

East Midlands - £1.3m

Healthcare funding to limited company to purchase two pharmacies over a 12 month period in the East Midlands one pharmacy next to GP surgery the second pharmacy some distance away from any GP surgery but on a main road.
 
Company directors experienced in the sector. Funding of £1.3M approved over 10 years with wholesaler scheme guarantee (80% LTV). Separate funding approved for one freehold business premises.

West Midlands - £675k

Healthcare funding to Limited company to refinance one pharmacy and fund the purchase of a second pharmacy in the West Midlands. Husband and wife both experienced pharmacists. Total facilities of some £675k (80% LTV) approved over 10 years with wholesaler scheme guarantee. Both premises leasehold.

GP SURGERIES

Surgery Development

100% funding requirement for GP surgery premises extension, upgrade, refinance, early repayment penalty and partner buy out. Together with a requirement to ensure repayments fell within Notional Rent.
We have worked closely with the partners and lenders to broker finance for a GP partnership where there was a significant change in the make up of the practice due to retirements, new incoming partners / salaried doctors and practice manager. The number of property owning partners also reduced substantially. Finance was required in order to  complete a large extension , renovation of the existing premises, refinancing  current borrowing including early repayment penalty and buy out of retiring partners and capital withdrawl by existing partners. It was essential that repayments were covered the notional rent.

Initially the partners had looked for a lender who was prepared to be flexible and offer a choice of fixed and variable interest rates together with C&I repayment holidays and if required would be prepared to split the facility so that each partner could have there “own” loan within the overall facility including a choice of repayment terms. However ultimately the partners decided that they wanted the certainty of fixed costs over the medium term and as such required fixed rates.

Effectively the partners required a 100% LTV loan facility repayable over a 25 year term covering  refinance, early repayment penalty, extension costs, partners buy out, all professional and bank costs together with partners capital withdrawl with repayments being met within a relatively modest notional rent..

There are many lenders in the market who would suggest that they are specialist GP surgery lenders and able to offer very flexible packages. In the event only one was able to be imaginative enough to work with “Sterling” and come up with an offer that satisfied all the criteria.

Other partners are due to retire over the next few years and so the deal had to be right to attract potential new partners to replace them.

One major lender well known specialist healthcare lender had simply said the proposition was unserviceable on the basis requested. Fortunately that proved to be incorrect

100% Bridging loan finance to purchase potential GP surgery site

“Sterling” were asked to broker finance for a partnership that desperately needed to move premises.

The proposition was not easy as the partners were looking to purchase a former grade 2 listed building that was larger than they required. Whilst they had verbal PCT backing they did not have formal approval (although discussions had led the partners to regard this as a formality) or the “certainty” of knowing the future notional rent.

They were under quite tight timescales to acquire the land and buildings and only had indications of development costs. The partners would require other businesses to be part of the development to make it financially viable but they did not and would not have “committed” partners by the time completion was required.

Given the current financial market lenders we less than keen to become involved in such a significant property development albeit medical centre and all the more so with the lack of concrete information on costs and income.

In the event we were able to work closely with the practice business manager and a series of lenders to obtain “bridging finance” to purchase the site against what was considered and accepted as reasonable projections.

No commitment was given to funding the final project however the partners together with lenders and Sterling are working together with a view to putting this in place.

100% funding refinance of GP surgery borrowing

Re finance of practice and GP surgery premises borrowing where cost overruns on change of premises and increased staffing costs due to expansion had put a temporary strain on the practice finances.

100% Funding GP partnership and property buy in (4 separate deals both through various lenders approved and drawn)

100% funding arranged for GP to buy into GP partnership (capital) and purchase a share of the premises. Fully unsecured. Interest rates and unsecured level fully recognised lending to a GP.

Single handed GP buying freehold surgery premises and equipment

100% funding 2010

100% funding arranged for single GP to purchase GP surgery premises from single handed retiring GP. Bank allowed full equity for security and interest rate purposes. Element of unsecured funding.

100% funding 2010

100% funding for GP to purchase, in their own name, freehold GP surgery premises and equipment for a practice with principle GP and salaried doctor and potential for growth. Current Notional Rent did not cover full repayment costs but likely to on appeal. Issues with the property and fairly high unsecured element on a written down basis. Funder allowed full equity for security and interest rate purposes

East Midlands - £1.6m

Healthcare funding of £1.6M was sought by large GP practice in East Midlands to purchase part of building they currently occupied from the PCT. 12 doctors were property owning partners. High income GP practice.

Initial notional rent covered all interest and a significant part of the capital. Funding in the name of the partnership. All doctors / partners initially had to make relatively small annual contributions. Funding taken on fixed rate. Notional rent increases will eliminate the need for doctor contributions over a relatively short period.

Funding was over 25 years 100% funding approved.

West Midlands - £750k

Healthcare funding of £750,000 sought by 2 doctors looking to join a single handed GP practice in the West Midlands. The current doctor to remain for 12 months until retirement.

The practice was in an area of growth with good PMS contract. Notional rent covered all loan repayment costs. Lending split 50 / 50 to each property owning GP partner. One took variable rate and one fixed rate funding both over 25 years. GP surgery premises were sufficient security for 100% funding.

North London. - £5.5m

Healthcare funding of some £5.5M sought for new medical centre development in North London. Surgery / medical centre funding in name of property development company wholly owned by doctors.

Pharmacy, included in the development leased to doctors and pharmacist and funded separately through wholesaler scheme guarantee.

Notional rent, inflation linked, covered the majority of the initial Capital and Interest repayments with the doctors making a small initial annual contribution. Borrowing for the development taken on fixed rates and expected to be self funding within 4 years after the first rent review. The pharmacy is self funding on projections.

100% funding with a mortgage over the medical centre and leasehold pharmacy premises and doctors each giving an unsupported guarantee for the written down shortfall in security.

Lancashire - £328k

Healthcare funding of £328k was arranged to established GP practice of 6 partners to enable the doctors to purchase additional premises to undertake services under a separate contract agreed and funded by the PCT.

Contract covered all annual capital and interest repayments but was only for an initial 3 year period. PMS practice which generated sufficient income to meet repayments in the event of the contract not being renewed.

100% funding approved with security over target premises being considered sufficient.

South West - £120k

Healthcare funding of £120,000 requested by GP to buy 50% of dispensing practice  current capital less liabilities. Loan required on a variable rate basis over 20 years. High income dispensing practice. Funding approved on an unsecured basis as requested.

CARE HOMES

Single Care home purchase – (South East - £940k)

We are approached to assist with the purchase of a 19 bed residential care home in the South East. Cost £946,000 funding requirement £615,000 @ 65% LTV.

Partnership, one partner experienced in the sector but not hands on the other no experience. However relatives and friends experienced in care home sector and providing hands on help. Experienced care home manager to stay on indefinitely, good care standards reports, high occupancy levels and fees.

A challenge as the property was not fully compliant and under 20 beds. However funding over 15 years was approved taking note of partners involvement in the care sector, cash contribution together with background of support and care home manager.

Two Care  Homes – (Midlands - £1.3m)

We were introduced to a client looking for care home funding in the Midlands. The current owners already had a 26 bed residential care home and were to purchase a second Residential Care Home of 19 beds in outskirts of the same city a relatively short drive away.

Some refinancing was required and gearing up against current care home.

Both homes had high occupancy levels, good relationships with social services and good care standards reviews. Total funding of £1.3M approved.

Purchase second Care Home – (Yorkshire - £1.35m)

We arranged Care Home Funding to enable a residential care home owner, (19 beds), to purchase a second residential care home  (31 beds).

Both homes were compliant with good care standards reports. Very high occupancy levels, income and profitability at current residential care home good but low target.

Combined value of both homes c£2M. Funding requirement £1.35M.

A challenge given the performance of the target but current care home owners experience along within that of both care home managers, who were both to remain in place gave comfort to lenders and the healthcare funding was approved.  Both homes fully compliant.

VETERINARY PRACTICES

Veterinary Hospital -  (Midlands - £695k)

We put together a comprehensive funding package to acquire a veterinary hospital premises and working capital of some £695k together with100% funding for property to house veterinary assistant @ £135k and a second property loan for a second assistant @ £145k.

Not stopping there, we arranged additional funding to enable the partners to purchase a property and complete renovation to set up equine centre including hospital.

All funding completed within an overall unsecured element of £300k per veterinary partner repayable over a 25 year term.

Veterinary practice - (Wales - £650k)

Healthcare funding of some £650,000 was arranged to enable the current sole proprietor to retire and a partnership of two relatively young but experienced vets to purchase the business (one was already work at the practice as an assistant) together with freehold veterinary surgery premises 100% funding arranged.

No personal security required. Loan repaid over 25 years.

Veterinary practice - (East Midlands - £330k)

Healthcare funding arranged for a vet in East Midlands to initially purchase a half share in a veterinary practice (vet had 20% deposit he wanted to put towards the purchase) and later purchase the remainder upon the retirement of the original owner (again with a 20% deposit).

A further 100% funding was arranged for the purchase of the veterinary surgery premises. Security was a charge over the surgery premises.

OPTOMETRISTS

Optometrist – (Wales - £770k)

We were approached by an experienced optometrist who had formerly owned an opticians business prior to sale and early retirement.

He requested healthcare funding to enable him to purchase an ongoing opticians practice. Total funding of £770k for premises, goodwill F&F and equipment.

We arranged a significant unsecured element and facilities approved over a 20 year term with security of a first charge over the target freehold premises together with a limited second charge over his family home. The overall unsecured element remained large.

Optometrist – (Midlands - £458k)

Healthcare funding was arranged for an experienced optometrist to purchase an ongoing opticians practice in the Midlands for £308k plus freehold opticians practice premises £150k. 

We arranged a total 100% lend of £458k repayable over 25 years, the security was a charge over target freehold business premises and life cover.

MEDICAL CONSULTANtS

Medical consultants – (East Midlands - £485k)

Healthcare funding of £485,000 was arranged for a medical consultant to purchase a property to use as consulting rooms and for very minor procedures.

We arranged 100% finance for the freehold premises, with the consultant providing capital to complete minor works to the property, car park and fit out. Security a first charge over target premises and life cover.