Atom bank has announced a change to its lending criteria, effective from today, aimed at supporting new and less experienced operators in the care home sector.
This move comes as part of the bank’s initiative to extend credit to essential but underfunded areas, such as health and social care.
To qualify, applicants must meet several requirements including a minimum stressed debt service cover of 145% and a maximum loan-to-value ratio of 70%.
Care homes must also have a ‘good’ or ‘outstanding’ rating from the Care Quality Commission and maintain at least 90% occupancy over the past six months. An experienced management team must remain in place after any purchase is made.
The update comes at a critical time as the UK saw a reduction in care home capacity in 2022, marking the first decline in three years. Atom bank aims to fill this gap by enabling new operators to secure necessary funding.
Tom Renwick, head of business banking at Atom bank, said: “We know the care home sector is facing a range of challenges at the moment.
“By addressing this gap, we hope more first-time operators can access the finance they need to get started and provide this much needed service.”
