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Business loans for home healthcare services

How to get funding for your company when insurance claims take forever.

,ying for healthcare can get complicated — from government benefits to private insurance companies, government benefits to handle and copays to collect. Keeping your home healthcare service running while you wait for insurance claims to come through might mean you need regular financing.

Beyond that, there’s equipment to buy, staff to hire and other costs that come with maintaining and expanding your business. We take you through what you need to know about getting the funds you need to keep things running smoothly.

What loan options are available for home healthcare services?

Your home healthcare service might benefit the most from financing designed to help with cashflow gaps. But you might want to check out other loan types if you’re looking for funding to hire new staff, a new vehicle or update your equipment. Let’s take a look at your options.

  • Line of credit. This option gives your business access to a credit limit that it can withdraw from as it needs — like a credit card with lower rates and higher monthly repayments. You can use it for any legitimate business expense — like if you want to create a website or attend a trade show to market your business — and can find both secured and unsecured options.
  • Equipment financing. Home healthcare services can find loans specifically designed to cover the cost of software, imaging, radiation therapy equipment and other devices necessary for your business. They also often come with leasing options, if you have a patient that needs a unique piece of equipment.
  • Auto loan. Need a van to transport patients or equipment? Buying a vehicle comes with a slightly different process than most loans, so you might want to look into business vehicle loans.
  • Commercial real estate financing. Need a new office — or want to expand the one you’re already in? This type of financing can walk you through the process of getting a new place.
  • Fixed-term loan. Have any large one-time expense on the horizon that isn’t covered by other loan types? You might just need a good old-fashioned business term loan. These come in a lump sum that you pay back plus interest fees over a set period of time, usually one to five years. You can use it for any legitimate business expense, like purchasing billing and scheduling software or hiring certified nurses for staff training.
  • Invoice financing. Here, your business can borrow against those outstanding invoices while patients and insurance companies argue over the bill. You typically pay it back as your invoices come in, though there may be a minimum monthly repayment plus an advance fee of 2% to 5%.
  • Invoice factoring. Rather than borrowing against your invoices, this option allows you to sell them to a third party for a percentage of the amount owed. It’ll take care of your loans from there and you won’t have to deal with the insurance companies or patients anymore. Healthcare providers might also want to look for medical receivables factoring or account receivables factoring.

Compare business loan options

1 - 3 of 3
Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
6+ months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Merchant Growth Business Loan
12.99% - 39.99%
$5,000 - $500,000
3 - 12 months
$10,000 /month
6 months
Unsecured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales.

Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.
Loans Canada Business Loan
6.60% - 29.00%
$4,000 - $500,000
3 - 60 months
over $10,000/month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.

Representative example: Keith opens an senior home care business

Keith has been working as a hospital nurse in British Columbia for the past 8 years and wants to transition into home care. With much of Canada’s population aging and the demand for in-home medical care increasing, Keith decides to start his own senior home health care business. There are already several established home care businesses in the surrounding region, and, knowing he’ll have to compete with other entrepreneurs as the market grows, Keith chooses to buy a home care franchise with a respected company rather than start from scratch with his own independent service.

Franchise fees alone will cost Keith $55,000.00. Along with the cost of advertising, training, equipment, insurance, licenses and permits, legal and accounting fees and other startup expenses, he’ll need a total initial investment of $90,000.00. This includes GST/PST on taxable goods and supplies; franchise fees are not subject to sales tax.

Keith applies for a business loan from an online lender and is approved, thanks to his solid credit history. He signs the loan documents, and the funds are soon deposited into his account.

Cost of starting a home health care business (franchise)$90,000.00
Loan typeBusiness loan (term loan)
Loan amount$90,000.00
Interest rate (APR)8.49%
Loan term7 years
Additional fees
  • Origination fee of 3.00% ($2,700.00)
  • Application fee of $0 (waived by lender)
Monthly payment$1,424.83
Total loan cost$119,685.72

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

What common business expenses can I cover with financing?

  • Overhead costs. Payroll, marketing, transportation, medical supplies — you need these things to run your business and they cost money. Money you might not have when an insurance claim takes 90 days to go through.
  • Equipment. Like everything else healthcare related, medical equipment is expensive. A medical equipment loan or lease can make paying for it a lot easier.
  • Vehicles. Auto financing can help you cover the cost of a van, car or any other vehicle your home healthcare business needs.
  • Buying or expanding an office. Commercial real estate financing can help your business buy, lease or expand your home healthcare service’s office.
  • Consolidating debt. If your business is already paying off several debts, then you might want to consider moving them to one loan — ideally with more favorable rates and terms.

What will I need to apply?

While it depends on the type of financing you’re looking for, lenders typically ask for the following information and documents at a minimum:

  • Your personal information. Business owners are typically required to provide their name, contact information and Social Insurance Number (SIN) when applying for any business loan.
  • Government-issued ID. Lenders also ask to see the business owner’s driver’s license or provincial ID.
  • A void cheque. Use a cheque from the business bank account you want to receive and repay the funds through.
  • Outstanding invoices. This one generally only applies to accounts receivable financing.
  • Bank statements. Lenders often ask to see the last 3 months of your business’s bank statements to get an idea of your current cash flow.
  • Your credit score. While some lenders ask for your business’s credit score, most rely on your personal credit score.
  • A business plan. Typically banks and credit unions like to see a business plan when you apply for funds. Online lenders sometimes ask to see one too, especially if you’re running a young business.

What challenges might I face getting financing for my home healthcare business?

When it comes to getting business financing, main challenge for home healthcare services can be the bookkeeping. You’re keeping track of invoices coming from insurance companies, patients and the government. If your patients pay with both cash and credit cards, this can make things even more complicated.

To improve your chances of getting approved, make sure your bookkeeping is spotless, regardless of what type of loan you’re applying for. You might want to consider using accounting software or even hiring an accountant to keep track of all your payments.

Home healthcare services can also have difficulty getting approved for term loans — which include most real estate, vehicle and equipment loans — if you don’t have a steady cash flow coming into your bank account. In this case, you might want to find ways to cover your costs with an option like accounts receivable financing.

5 tips to expand your home healthcare service

We gathered some business advice from Home Care Pulse, the home healthcare industry’s leading firm in satisfaction research and quality assurance, that could help you take your home healthcare service to the next level:

  1. Get involved in your community. This can mean anything from setting up a booth at the local farmer’s market or getting involved in any annual or regular community events. This helps put a face to your company and make your service’s name the first that comes to mind when your neighbors need home healthcare.
  2. Partner with other agencies. This might sound counter-intuitive, but partnering with other agencies can actually help your business. You can buy supplies together to get greater discounts and refer each other patients the other partner can’t take on.
  3. Branch out your advertising. All of your money in online ads? Consider paying for a billboard or radio ad. By advertising in as many different mediums as you can, you’ll expand your audience.
  4. Take advantage of social media. Post on social media regularly and try to tell a story that people will be compelled to watch — even if they know it’s sponsored content.
  5. Know thy competition. Look at the other home healthcare providers in your area and try to find their weak points. If they don’t offer a certain service, offer it. If they have an incentive program, make a better one.

Bottom line

The fact is that most home healthcare services will need financing at some point. Invoice factoring and financing can help your business cover its bases, while other, larger loans can help your business pay for one-time expenses. Want to learn more about business loans? Check out our guide to learn how it all works and compare lenders.

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