4 Best Home Healthcare Loan Options & Where to Find

A home healthcare loan can help small businesses fund a territory expansion, new business acquisition, or finance your immediate working capital needs. Due to the speed of growth in the home healthcare industry, the best loan options will fund quickly with short repayment terms and low origination fees. These loans can help you get quick access to growth capital.

OnDeck, which sponsored this article, offers a small business loan to help you deal with territory expansion or unexpected expenses. You can qualify if you have a $100k+ in annual business revenue, a 500+ credit score, and at least 1 year of business history. To apply you’ll fill out an online application that takes about 10 minutes.

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Best Home Healthcare Loans at a Glance

How We Determined the Best Home Health Care Loans

The home healthcare industry is one of the fastest growing industries in America, with the annual growth for services hitting nearly 5%. This means that home healthcare businesses have a lot of expenses related to growth activities like entering new geographic territories, buying other businesses, hiring new employees, and spending to meet day-to-day working capital needs.

When deciding on the best home healthcare loan options we took these things into consideration:

• Time to Fund: This is how long it takes for you to get the money. Many businesses need quick capital to pay home health aides or to pay for unexpected expenses. This is really important if your insurance payments didn’t come through as expected.
• APR: The annual percentage rate is the rate of how much you’re charged on your loan, including interest and fees.
• Origination Fees: This is how much you pay your lender to loan you the money.
• Maximum Loan Amounts: This is how much you can get.
• Repayment Terms: This is the number of months, or years, you’ll have to pay off what you’ve borrowed.
• Qualification Requirements: These are the minimum requirements for you to get approved for a particular type of loan, or with a specific lender.
• Home Healthcare Funding Needs: We took into consideration the needs of your specific business when looking at all of these other factors.
• Ability to Work With Franchisors: Many home healthcare businesses are franchisees, which means that it will make your life easier if your franchisor approves of, or is familiar with, the lender you choose.

Your business needs enough working capital available to quickly move at the pace of the industry when it’s time to expand or take on new patients. Cash flow throughout the industry is difficult to rely on due to the nature of insurance payments .The instability of these payments can create cash flow challenges when an opportunity comes up for you to expand into a new territory or buyout another business’s book of patients.

Since your business is likely looking for funding to grow we recommend a short term loan from an online lender like OnDeck. These loans can provide quick access to capital up to $500k in as little as 1 business day. That will help established businesses get access to the money they need to grow with loan qualifications a little less strict than the local bank.

These loans can also help you with day-to-day working capital needs in the event you don’t receive insurance payments in the time you expect. Plus, unlike traditional loan options a short term loan doesn’t include expensive origination fees. So it’s more affordable to pay it off quickly than loans with lower rates.

Short Term Loans For Home Healthcare Businesses

A short term loan is a lump sum loan with fixed weekly or monthly amortized payments. These loans typically have higher interest rates and short repayment terms of less than 3 years, but don’t carry expensive origination or hidden fees. You can receive up to $500k in funding and typically will be able to get access to your funds within 1-3 days.

Short term loans are best to fuel growth or other initiative with a defined ROI, which your home healthcare business will likely need either now or in the future. For example, the industry is growing so quickly that a new territory from your franchisor can open up and only be available for a short window of time—meaning you’ll need to act quickly to come up with the funds to expand before the opportunity is given to someone else.

Short Term Loan Costs

The total costs for a short term loan will generally fall into these ranges:

• APR: 30 – 50%
• Prepayment Penalty: None

Short term loan providers require you to agree to repay a fixed dollar amount instead of charging you interest for the period you’re in repayment. This means that while there are no penalties for paying off the loan early, you also won’t save any money.

Short Term Loan Terms

Short term loan terms will typically carry these terms:

• Loan Amount: Up to $500k
• Repayment Term: 3 – 36 Months
• Repayment Cycle: Weekly
• Time to Funding: 1-3 Days

A loan for up to $500k is perfect for home healthcare businesses wanting to grow right now. This will give you the capital you need to market your business in a new area and hire new home health aides as you take on new patients.

Short Term Loan Qualifications

To qualify for a short term loan you must meet these minimum qualifications:

• Minimum Personal Credit Score: 500 (check your credit score for free here)
• Minimum Time in Business: 1 Year
• Minimum Annual Business Revenue: $100k

These loans are relatively easy to qualify for in the home healthcare industry because the qualifications are mainly focused on your business revenue. Revenue continues to climb throughout the industry which should help you qualify, and although your personal credit history will always be part of a business creditworthiness discussion, it’s not the only thing short-term lenders look at and isn’t the go-no-go factor in deciding whether or not you qualify for a loan.

What’s Missing From a Short Term Home Healthcare Loan

Short term loans are great to help you grow your home healthcare business in a pinch by providing a large lump sum of cash to spend on a expansion. However, short term loans require you to apply every time you need capital and they typically aren’t a good fit for recurring working capital needs, like paying your home health aides even before you’ve received payment for services they’ve rendered.

Where to Find Short Term Loans

OnDeck offers short term loans up to $500k and you could be funded in as quick as 1 day. You can pre-qualify by filling out an online application which only takes about 10 minutes.

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Business Line of Credit for Home Healthcare Businesses

A business line of credit (LOC) is an approved maximum amount of money you can draw from over and over again. You’ll only pay interest on what you currently owe so it’s a more affordable solution than other loans if you just need financing in small spurts. You won’t have to reapply every time you need financing and you can typically get approved for a credit line up to $100k.

A business LOC is best for home healthcare companies looking to pay for recurring working capital expenses while you wait for insurance payments from patients. For example, you can use a LOC to fund the purchase of medicines or to replace physical therapy equipment if your cash flow is tight because you’re waiting for medicare payments from insurance providers.

Business Line of Credit Costs

A business line of credit will typically carry these costs:

• APR: 13.99 – 40% (best rates are reserved for prime borrowers)
• Prepayment Penalty: None

LOC Terms

A business line of credit will carry the following terms:

• Loan Amount: Up to $100k
• Repayment Term: 6 Months
• Repayment Cycle: Weekly or Monthly
• Time to Funding: 1 – 3 Days

For a small home healthcare business these terms are ideal. This line of credit can cover your day-to-day working capital needs or help you pay for any unexpected expenses that come up while you wait for insurance payments. Since this is short term capital, you won’t have to worry about extra origination fees that could quickly become expensive, plus you can get access to capital quickly.

Small Business Line of Credit Qualifications

In order to qualify for a small business line of credit you’ll need to meet these minimum qualifications:

• Minimum Personal Credit Score: 600 (check your credit score for free here)
• Minimum Time in Business: 1 Year
• Minimum Annual Business Revenue: $100k

You can learn more about these minimum qualifications by reading our guide to a business line of credit.

What’s Missing From a Business Line of Credit

A business line of credit (LOC) is generally great for home healthcare businesses needing a financing solution for normal day-to-day expenses. However, you can only borrow up to $100k with a LOC and only prime borrowers can qualify for the most affordable rates. If you need growth capital to open a new geographic territory or buy another business then you’ll need to look at other options.

Where to Find a Small Business Line of Credit

OnDeck offers a LOC up to $100k with rates as low as 13.99% for prime borrowers with a strong credit history. You can get pre approved by filling out their online application, which takes about 10 minutes. You can get access to your credit line in as quick as 1 day.

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Business Credit Cards for Home Healthcare Businesses

Business credit cards work just like a business line of credit but it’s easier to qualify for and typically carries a much smaller financing amount. You’ll typically get approved for less than $20,000 in financing and can qualify for cash back or rewards points to use on purchases within your business. Since you have 30 days to pay off what you spend, a business credit card works like an interest free loan.

A business credit card is something that every home healthcare business can benefit from. It’s best used to make small working capital purchases throughout your day-to-day operations. For example, you can use a card to cover the fuel for your nurses or physical therapists as an incentive for them to work with you. This could help you retain employees in a very competitive job market and it’s also good to pay for recurring expenses like insurance premiums.

Business Credit Card Costs

A business credit card will typically carry these costs:

• Interest Rate: 12 – 29%, some have 0% introductory offers
• Annual Fee: $0 – $350+

Business Credit Card Terms

A business credit card will carry these terms:

• Loan Amounts: Up to $100k but typically less than $30k for most businesses
• Repayment Terms: 30 days interest free
• Time to Funding: Instantly – 2 Weeks (the time it takes to receive your card)
• Initial Rewards: Introductory APR of 0% for 7 – 18 months or cash back if you spend a certain amount within the first 2-6 months
• Ongoing Rewards: Cash back on all purchases or points you can redeem for useful rewards

Cards with cash back rewards or cards with fuel rewards will be best for your home health care business because you’ll be able to use those rewards to cut down on your daily expenses. For example, you and your employees do a significant amount of traveling. You can be rewarded with points or money off of your fuel purchases. Read our best small business fuel card article to learn more.

Business Credit Card Qualifications

The minimum qualifications for a business credit card are:

• Minimum Personal Credit Score: 650+ for best offers (check your credit score for free here)

Your business revenue will also be a major factor in determining your eligibility for a business credit card and in helping your lender decide on the size of your credit line.

What Business Credit Cards are Missing

Business credit cards are great for home health care businesses wanting to pay for small day-to-day expenses. However, you’ll typically only qualify for a credit line of less than $30k so these cards aren’t a good fit to grow your business or make any significant purchase.

Where to Find Business Credit Cards

You can learn more about business credit cards and decide which might be best for you by reading our guide that provides the best small business credit cards. If your home healthcare business is just launching, read our article on the best credit cards for startups.

SBA Loans for Home Healthcare Businesses

SBA loans are borrowed from traditional lenders like banks and guaranteed by the Small Business Administration (SBA). These loans typically carry the longest repayment terms and lowest interest rates available to small businesses. These loans are also difficult to qualify for and can take months to get to funding.

There are many different types of SBA loans to choose from. Overall, these loans are best used by home healthcare businesses to expand or buy out another home healthcare business. While SBA loans are typically for established businesses, you could get approved as a startup. Read our article on how to get an SBA startup loan to learn more.

SBA Loan Costs

SBA loans typically carry these costs:

• Interest Rate: 5% – 10% (check current SBA loan rates)
• Prepayment Penalty: None
• Origination Fee: 0.5 – 3.5%
• Loan Packaging Fee: $2k – $4k
• SBA Guarantee Fee: 3 – 3.5% (Waived if loan amount is under $150,000)

While the interest rates are more affordable than other options in this article, the fees are much larger. This means that an SBA loan is best for long term financing and can be an expensive short term solution. You can learn more about the fees associated with an SBA loan by reading our article on the SBA guarantee fee.

SBA Loan Terms

SBA loans will generally carry these terms:

• Loan Amount: Up to $5 million
• Repayment Terms: Up to 10 years
• Repayment Cycle: Monthly
• Time to Funding: 30 – 90+ days

You’ll only need a few hundred thousand dollars to get started in the home healthcare industry, but the other terms are about as good as you’ll likely be able to get. Home healthcare businesses don’t have a huge need for long term capital like this unless you have a substantial growth plan over the next couple of years.

SBA Loan Qualifications

To qualify for an SBA loan you’ll need to meet these minimum qualifications:

• Minimum Personal Credit Score: 680 (check your credit score for free here)
• Collateral: Typically required
• Down Payment: 10-20%
• Time in Business: 2+ Years

Home healthcare businesses will typically find it easier to qualify for an SBA loan than many other industries because of the consistency and growth opportunity of your business. You can learn more about the SBA loan process by reading our article on how to apply for an SBA loan.

What’s Missing With an SBA Loan

SBA loans are a great financing source for home healthcare businesses that are looking to grow through acquisition. However, these loans require a lot of time and attention during the application process which could take you away from your business operations. Plus, only prime borrowers will qualify and you may not get funded for 90+ days.

Where to Find SBA Loans

You can apply for an SBA loan at a traditional lender, like your local bank. Each lender will have different qualification standards and application processes. Our article on the top 100 SBA lenders can help you determine which lender might be right for your business.

3 Ways to Improve Your Home Healthcare Loan Approval Chances

Home healthcare is the fastest growing industry in the country so you should have plenty of financing options. However, there are a number of things that could trip you up during the application process which may disqualify you for a loan. Knowing common factors that prevent home healthcare businesses from getting approved before you apply can improve your chances if you address them.

According to Ty Kiisel, Editor at OnDeck,

“It’s important that home healthcare business owners answer three main questions when applying for a loan:

1. Can you repay the loan? In other words, do you have the revenue and cash flow to make each and every periodic payment?
2. Will you repay a loan? Does your previous credit history demonstrate that your business has a good track record?
3. Can you demonstrate that you can and will make each and every payment should something unexpected happen?

In the home healthcare industry, long-term contracts will likely help you answer some of these questions.”

The 3 main obstacles that cause stylists to get denied for beauty salon loans are:

1. Show You Can Repay the Loan

When preparing to apply for a business loan you need to make sure you have prepared proper financials that include projections for three years or more. The projections will give the lender a good idea of whether or not your business plan is attainable and what your potential cash flow could look like. This is a good indicator of whether you’re able to repay the loan.

A best practice is also showing your business plan on how you plan to use the capital to grow the revenue of your business. More revenue means more cash coming into the business for you to be able to make all of these debt payments. There are numerous ways you can grow your revenue as a home healthcare business.

Julie Smith, CEO of Homewatch CareGivers, says you can grow revenue by:

“Our focus is twofold — demonstrating those measurable outcomes that differentiate our services to client families and referral sources, and recruiting and retaining the best caregivers to help deliver those services.

For services, the key is measuring hard and soft indicators of health, and giving family members and referral sources as clear a picture as possible of the impact of quality home care on an individual’s care plan. For caregivers, we focus on retention by providing top-level training and ongoing education and ensuring caregivers are able to stay at the jobs they love with sufficient wages and hours.”

2. Demonstrate That You Will Repay the Loan

Being able to show a strong personal credit score goes a long way in showing a potential lender that you’re a responsible borrower worth taking a chance on. Your credit history shows your lender how you’ve dealt with other credit accounts you’ve been given in the past. This is why it’s important to have the highest score you possibly can when you apply.

While your business credit score won’t necessarily be a factor in approving your loan, it’s a good opportunity to show a potential lender how your business deals with debt. Having a strong business credit history shows your potential lender that your business has handled debt in the past and that you’ve chosen to make your loan payments.

Showing that you’ve made the decision in the past to make your credit payments is a good indicator that you’ll do the same thing in the future with your next loan.

3. Convince Lenders You Can Deal With Unexpected Circumstances

Lenders need to be convinced that you’ll pay their loan payment first, no matter what happens. In home healthcare it can be difficult knowing when you’re going to lose a patient and take a dip in revenue. If your business is struggling to get new patients then it might be time to think about a new sales and marketing strategy.

Lori Yount, CEO of HomeWell Senior Care, says “Every time I have ever seen someone fail in the healthcare space it is due to a lack of consistent sales efforts. The number one contributing factor to top line revenue growth is a commitment to ongoing, diversified and consistent sales, which takes a deliberate, planned, effort every single day.”

We have a lot of articles on our site that can help you improve your overall sales and marketing strategy.

Bottom Line

The home healthcare industry is booming and it can be difficult keeping up with the rapid growth opportunities and hiring demands. You need quick financing options you can access to help when growth opportunities become available. Your best loan option is going to be a short term loan because it will provide up to $500k in financing with the quickest funding time.

OnDeck offers short term business loans up to $500k. You can qualify if you have a 500+ credit score, 1+ year in business, and $100k+ in annual business revenue. Their online application only takes 10 minutes and you can be funded in as quick as 1 day.

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