Frequently Asked Questions

Below is a list of frequently asked questions (FAQs). If you have a question or query which is not answered below, then please feel free to call us on 08444 144371 or use the online enquiry form on the right-hand side of the page.

Why should I choose a broker and why Sterling Capital Reserve Ltd

Sterling Capital Reserve Ltd is a well established and professional commercial finance brokerage. We have recognised that healthcare is a specialist area, and consequently, we are one of the few brokerages in the UK that now have a specialist healthcare division.

We pride ourselves on:

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Are there any specialist lenders in this sector ?

Yes - There are a number of specialist healthcare sector lenders. Some are strong in lending for one /two and perhaps three businesses, others perhaps not so strong at that level but have a greater appetite for 3 to say 7 plus practices / businesses.

Some are strong in doctors, dentists etc. whilst others have greater appetites say for care home funding. This is where our experience and expertise benefits you, as we will know the right lenders for your deal.

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Do you know any specialist valuers/specialist selling agents?

Yes - We have relationships with a number of valuers around the country. We would be happy to introduce you to them.

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What do you charge?

This will depend on what we are being asked to do.

Having said that, we would generally expect to be paid by the lender out of the arrangement fee they charge you and we would normally expect half of that fee.

Our fees are either paid direct by the lender out of the arrangement fee they charge you or, alternatively, the lender will reduce their fees and ask you to sign an authority to allow them to pay us direct. We would usually expect to receive half of the arrangement fee.

In any event, you will not be charged more for our involvement than you would otherwise have been charged.

We would expect to take an additional charge if you need help in preparing a business plan.

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What will all this cost me?

That will depend on the transaction.

There will be interest, usually linked to base but depending on the amount and the lender, may be linked to 3 month LIBOR.

Arrangement fees: These can vary significantly from one lender to another. You will be expected to cover your own and the lenders solicitor and security costs (don’t forget stamp duty on property). Where the transaction is sufficiently large or a company is purchasing the share capital of another company, the lender may well want to put in their own solicitors and you would have to cover these costs, which could be expensive.

If you are looking at a significant new build, the lender is likely to ask for monitoring surveyors and you would have to cover their cost.

Valuation costs: This may be property and or business valuation, and these can vary depending on the lender and valuers used. The list is not exhaustive.

Our costs are usually met by the lender, and where they are not, we will advise you of this up front. We earn our money by structuring a funding package that suits you best.

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I have only recently qualified. Will a bank lend to me?

Experience is an important factor in evaluating a lending proposition. Lenders are not generally keen to lend to people inexperienced in the sector they are looking at.

However, depending on the proposition, level of contribution and security, we do have lenders who are prepared to consider lending to recently qualified professionals. Why not contact us and see what we can do?

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I do not have any savings. Can I get finance?

Generally, subject to satisfaction with serviceability, levels of unsecured debt, experience and the individuals own level of commitments, doctors, dentists and vets can expect to be offered finance with little or no contribution.

In some cases the funder will also lend to cover legal and other costs related to the purchase. Cash contributions are usually required for other healthcare propositions and these will vary according to the sector and satisfaction of the above. The banks may be prepared to accept a charge over property in substitution for a cash contribution.

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What security do I have to give?

Depending on what you are looking to purchase, levels of serviceability, cash contribution, level of unsecured debt, experience and your own commitments, it is possible that no security, other than life cover, would be asked for.

However, if you are purchasing a property freehold or leasehold, the lender will invariably look to take a charge over this.

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Do I have to put my home at risk?

Most lenders do not like to take charges over family homes and will generally only do so as a show of commitment and as a last resort where they want to lend but feel uncomfortable at the level of facilities sought.

Some healthcare sectors e.g. doctors, dentist and vets are less likely to be asked for additional security than others.

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I want to purchase and run a number of practices/businesses. Will a bank lend me the money?

We have contacts with lenders who have specialist healthcare sections where, for the right proposition and the right individual(s), they are prepared and willing to lend substantial monies, a significant proportion of which may be unsecured, for the purchase of more than one practice / business.

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Will someone help me complete a business plan?

Generally, this will be produced by your accountant in conjunction with yourself. They will charge a fee for this.

Where necessary and appropriate, we will be happy to help you put a business plan together. We also have in-house qualified chartered accountants that put together business plans and projections for our clients.

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I have a bad credit history. Will a bank lend me the money?

In today's climate, generally lenders are very wary. Funding will depend on the reasons for your bad credit history, your current position and future prospects. Expect challenging questions. But contact us and let's see what we can do.

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Will I need life cover?

Most lenders will make life cover, for the amount of the loan, a condition of the facility along with permanent health insurance and/or locum cover. As a general rule, the lender would expect to be able to quote for the business but would also allow you to arrange cover through your own broker.

We are not IFAs and do not sell insurance or investments, but we would recommend that you take advice from an IFA that is not tied.

We regularly refer clients to a small number of competent financial advisors to assist in this area.

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Why are doctors, dentists and vets treated differently than other borrowers?

Lenders see doctors and dentists as supported by the NHS and therefore less likely to get into financial difficulties. Private dentists are also considered safe, particularly in areas where there is a shortage of NHS dentists and/or they have a good capitation scheme in place.

Vets are seen as being partially protected from recession as pet owners will often prefer to spend on their pets than themselves.

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Why do banks usually require larger cash contributions from care home owners?

The value of good care homes in general has increased by up to three times over the last 3 to 5 years. However, changes in legislation has put ever increasing pressure on the levels of care provided and the need to ensure that not only are the buildings compliant, but also the maintenance of records are as well.

Shortage of funds has meant that in some areas social services actively look to support people in their own homes rather than put them into care. Any shortfall in the levels required can lead to a sudden fall off in residents and the potential for social services to remove their residents. Given the additional risks, it is not a surprise that lenders often seek additional contributions.

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I am looking to buy a pharmacy. Are there any special schemes to help me?

Special wholesaler schemes are still in place but lenders prefer to lend direct if they can.

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Do banks lend for pharmacy purchase without wholesaler support?

It is no longer the case that most lenders will require wholesaler support before agreeing to lend significant monies for pharmacy purchases. A number would prefer to lend direct, subject to a suitable customer contribution. Others will lend, say, up to 50% against goodwill value and will only look to wholesaler support where this will be insufficient.

We are able to arrange finance of up to 80% of the goodwill value, and recent additional contacts indicate that we may be able to arrange up to 90% packaged funding.

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Will a bank lend for a leasehold property?

Lenders in this sector are used to lending for leasehold property so the straight answer is yes, subject to the usual caveats regarding serviceability etc.

The lender would want to know the terms of the lease and may want any onerous clauses removing. They would also warn you as to your commitments regarding continuance of paying rental if you stop trading and cannot sell the lease on.

You also need to consider the term of the lease, and if you are the first lessor. Also, are there any commitments at the end of the term i.e. that may require the lessor to convert the property back to the condition and layout when the initial lease was taken.

However, most lenders would not see any security value in a lease unless it was long term - over 21 / 35 years.

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My accountant says that I should buy the property in my name and run the business through my company. Will a bank lend to me and my company?

This is not unusual. If the proposition is supportable and a lender would lend in one format it is likely to lend as proposed.

However, you should note that lenders may require a lease to be put in place. This in turn, may then make the property transaction fall within the lenders investment property criteria, where lending criteria is usually more strict. If the initial proposition stacks up you/we would expect to be able to put a supportable argument together.

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Will a bank lend to my company and how will this be different from lending to me personally?

There should be no issue with lending to a company other than a potential requirement for a lease(s). The lender is likely to ask for directors guarantees which may or may not need to be supported.

This will no doubt depend on the strength of the proposition. Essentially the lender would not wish to weaken its position and would want to be in the same situation from a risk perspective as if it were lending to you direct.

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What about my age?

Age should not be barrier. However, most lenders will look for any borrowing to be repaid by either “normal” retirement age or age 70.

If lending to a partnership, the lender will often look at the age of the youngest partner.

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Will my wife/husband have to be included on the loan?

Generally a lender would expect all owners to be part of any facility including loans.

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How can I be sure that I am getting a good deal?

We at Sterling Capital Reserve Ltd, upon receipt of your instructions, will assess your proposal. Once we are comfortable with it, we will approach a number of lenders whom we know should be interested in lending for your proposition.

We are aware that some lenders prefer to lend for single transactions and others for more than one. We also know the lenders general, and in many cases specific, appetite for different types of deals and their pricing, contribution and security levels required.

We will come back to you with details and discuss the best way to move forward including timescales. This will save you trawling the market yourself (and allow you to continue earning), and be comfortable that not only will we have contacted the obvious, but are likely to have approached specialist lenders that you are unlikely to be aware of.

We look to source the most appropriate financial package in terms of contribution, interest rate and fees, level of security and term. Lenders are aware that we will be speaking to other lenders and expect to have to offer their best package. It is not unusual for lenders to offer better lending margins when approached by us.

We are paid by the lender out of the arrangement fees they charge. These are not inflated to cover our cost, and clients should pay no greater fees because of our involvement.

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I may want to repay early. Can I do this?

You should always be able to repay your loan/facility early. However, in certain circumstances early repayment may trigger early repayment penalties e.g. where you have a fixed rate, or where your interest rates/fees at start up or in the early years of the facilities are at a discounted rate.

Generally there are no penalties for early repayment of variable rate facilities. However, some lenders do impose penalties and you should always read the facility agreement before signing it. If unsure, you should ask the lender and/or consult a solicitor.

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I may want fixed rates!

Fixed rates and interest rate management products should be available from most lenders, but these may vary depending on the amount and term you borrow over.

You should be aware that there are likely to be penalties, possibly significant penalties, for early repayment of all or part of the facilities under a fixed rate agreement.

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What information will I have to provide to proceed ?

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Can I speak to a person please?

YES - We will be delighted to speak to you.

Our head of healthcare funding is Steve Divall. Steve can be contacted direct on his mobile 07970 893 414 or if you prefer, just drop him an email on steve@sterlingcapitalreserve.co.uk

Steve tries to get back to customers the same day. If you leave a message, please do not forget to leave your contact telephone number, e-mail address and the best time and day to contact you.

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You are in a specialist sector – Use a specialist broker