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 immediate working capital needs. Because of the speed of growth in the home healthcare industry, the best home healthcare business funding options are quick and inexpensive. These loans can help you get quick access to growth capital.

OnDeck, which sponsored this article, offers a small working capital loan to help you deal with territory expansion or unexpected expenses. You can qualify if you have $100,000 or more in annual business revenue, at least a 600 credit score, and at least one 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

If you’re uncertain about which loan will be best for your business, be sure to sign up for our free webinar. We’ll discuss the most common types of small business loans for home healthcare businesses, review costs and qualifications, and show you how to choose the right option for your business.

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How We Determined the Best Home Healthcare Loans

The home healthcare industry is one of the fastest growing industries in America, with the U.S. Census Bureau predicting industry growth of 41% by 2026. 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 business funding options, we considered:

• Speed of funding: This is how long it takes for you to get the money. Many businesses need quick capital to pay home health aides or unexpected expenses.
• Overall costs: The interest rate and origination fees due for the home healthcare loan.
• Maximum loan amounts: This is the amount of home healthcare business funding you can qualify for.
• Repayment terms: This is the number of months, or years, you have to pay off what you’ve borrowed.
• Qualification requirements: These are the minimum requirements for you to get approved for a particular home healthcare loan or with a specific lender.
• Home healthcare business funding needs: We took into consideration the needs of your specific business when looking at these other factors.
• Ability to work with franchisers: Many home healthcare businesses are franchises, so it will make your life easier if your franchiser approves of, or is familiar with, the lender you choose.

Your business needs enough working capital available to sprint 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 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 buy out another business’s book of patients.

Since you’re likely looking for home healthcare business 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 $500,000 in as little as one business day. That will help established businesses get access to the money they need to grow with loan qualifications that are less strict than the local bank.

These loans can also help you with day-to-day working capital needs if 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 and has a quick loan application process. So it’s more affordable to pay it off quicker 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 have higher interest rates and short repayment terms of less than three years but don’t have hidden fees or charges. You can receive up to $500,000 in home healthcare business funding and will get access to your funds within one to three days.

Short-term loans are best to fuel growth or other initiatives with a defined return on investment, which your home healthcare business will need. For example, the industry is growing so quickly that a new territory from your franchiser can open and only be available for a short window of time— meaning you must act to come up with the funds to expand before a competitor takes the opportunity.

Short-Term Home Healthcare Loan Costs

The total costs for a short-term home healthcare loan will fall into these ranges:

• Starting interest rates: As low as 9.99%
• Expected APR range: 30% to 50%
• Prepayment penalty: None

Short-term loan providers require you to agree to repay a fixed dollar amount instead of charging interest for the period you’re in repayment. This means that there are no penalties for paying off the loan early and you also won’t save any money. However, starting rates compete with traditional financing and start as low as 9.99%.

Short-Term Home Healthcare Loan Terms

A short-term home healthcare loan will typically carry these terms:

• Loan amount: Up to $500,000
• Repayment term: Three to 36 months
• Repayment cycle: Weekly
• Time to funding: One to three days

A loan for up to $500,000 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. It also affords your business the opportunity to use the revenue to repay the loan due to its long repayment terms up to 36 months.

Short-Term Home Healthcare Loan Qualifications

To qualify for a short-term home healthcare loan, you must meet these minimum qualifications:

• Credit score: At least 600
• Time in business: At least one year
• Annual business revenue: At least $100,000

These loans are easy to qualify for in the home healthcare industry because lenders put an emphasis on your business revenue when approving your business. Revenue continues to climb throughout the industry, with 80% home healthcare businesses organized as for-profit companies, which should help you qualify. Although your personal credit score will need to be at least 600 to qualify, it’s not the only thing short-term lenders look at.

What Is Missing From a Short-Term Home Healthcare Loan

Short-term loans are great to help you grow your home healthcare business by providing a large lump sum of cash to spend on 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. An alternative form of healthcare financing that works well for recurring expenses like payroll is a business line of credit.

Where to Find Short-Term Loans for Home Healthcare Business Funding

OnDeck offers short-term loans up to $500,000 and you could be funded in as quick as one day. You’ll need a personal credit score of at least 600 with a year of business history to qualify. Its online application takes 10 minutes to complete, and you can get an approval decision the same day.

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Business Lines of Credit

A business line of credit (LOC) is an approved maximum amount of money you can draw from repeatedly. You’ll only pay interest on the current draw so it’s a more affordable solution than other loans if you need financing in small spurts. You won’t have to reapply every time you need financing and you can get approved for a credit line up to $100,000.

A business line of credit is best for home healthcare companies looking to pay for recurring working capital expenses while waiting for insurance payments from patients. For example, you can use a line of credit to fund the purchase of medicines, replace equipment, or cover occupational therapist insurance premiums 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:

• Starting interest rates: As low as 13.99%
• Expected APR range: 20% to 40%
• Prepayment penalty: None
• Other fees: Some lenders may charge service fees or other fees if you don’t use your line of credit within a year, but these aren’t common.

A business line of credit has a lower expected APR range than a short-term loan of 20% to 40%. This is because you only owe interest on the funds you borrow, which allows home healthcare businesses to use the funding to get through a seasonal downturn. You’ll also have up to 12 months to repay the draw, which can lower your total cost of capital.

Business Line of Credit Terms

A business line of credit will carry the following terms:

• Loan amount: Up to $100,000
• Repayment term: Up to 12 months
• Repayment cycle: Weekly or monthly
• Time to funding: One to three 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 a short-term capital, you won’t have to worry about extra origination fees that could become expensive, plus you can get access to $100,000 in one to three days.

Small Business Line of Credit Qualifications

To qualify for a small business line of credit, you must meet these minimum qualifications:

• Credit score: At least 600 (check your score for free)
• Time in business: At least one year
• Annual business revenue: At least $100,000

A business line of credit has the same minimum qualifications as a term loan, however, because the line is revolving, the funding amounts are smaller and the repayment terms are shorter. Line of credit providers will evaluate your credit score, but a major deciding factor is your annual business revenue, which should be at least $100,000. Applying when your annual revenue is trending upward can also help your business secure additional capital.

What Is Missing From a Business Line of Credit

A business line of credit is great for home healthcare businesses needing a financing solution for normal day-to-day expenses. However, you can only borrow up to $100,000 with a line of credit and only prime borrowers can qualify for the most affordable rates. If you need a smaller amount of revolving financing that offers rewards, consider getting a business credit card instead.

Where to Find a Small Business Line of Credit

OnDeck offers a line of credit up to $100,000 with rates as low as 13.99% for prime borrowers with a strong credit history. You can get pre-approved by filling out its online application, which takes about 10 minutes. Once you accept an offer, OnDeck can fund your business as soon as the next business day.

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Business Credit Cards

Business credit cards work like a business line of credit but it’s easier to qualify for and carries a smaller financing amount. You’ll typically get approved for less than $30,000 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 use. 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 added work incentive. This could help you keep employees in a 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: 15% to 29%; some have 0% introductory offers
• Annual fee: Up to $350

A business credit card offers a home healthcare business a smaller credit line, which might include rewards and other benefits. Although the interest rates are higher than some other options, your business only owes interest on a balance that’s outstanding for over 30 days. Which means you could borrow funds for day-to-day expenses with no interest.

Business Credit Card Terms

A business credit card will carry these terms:

• Loan amounts: Up to $100,000 but typically less than $30,000 for most businesses
• Repayment terms: 30 days interest-free
• Time to funding: Instantly to two weeks (the time to receive your card)
• Initial rewards: Introductory APR of 0% for seven to 18 months, and a cash bonus (or points bonus) if you spend a certain amount within the first two to six months
• Ongoing rewards: Cashback or rewards points

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, your business can earn points or discounts for fuel purchases. You’ll receive less home healthcare business funding than a line of credit will offer, with most businesses typically receiving around $30,000.

Business Credit Card Qualifications

The minimum qualifications for a business credit card are:

• Credit score: At least 680 for best offers

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. As your business revenue increases, your credit line will also get larger. To qualify for the best offers, including the best rewards programs and introductory rates, you’ll need a credit score of at least 680.

What Business Credit Cards Are Missing

Business credit cards are great for home healthcare businesses wanting to pay for small day-to-day expenses. However, you’ll typically only qualify for a credit line of less than $30,000 so these cards aren’t a good fit to grow your business or make any significant purchase. For higher home healthcare business funding amounts, consider getting a short-term loan or line of credit besides a business credit card.

Where to Find Business Credit Cards for Home Healthcare Businesses

The best small business credit cards offer borrowers the opportunity to earn rewards while making day-to-day purchases. Qualifying is simple and you can use your business credit card as soon as it arrives in the mail. It’s a great addition to any business financing your business already has and adds a great deal of flexibility to the way you manage your business cash flow.

SBA Loans for Home Healthcare Businesses

Traditional lenders like banks offer SBA loans that are partially guaranteed by the Small Business Administration (SBA). These loans carry the longest repayment terms and lowest interest rates available to small businesses. SBA loans are also difficult to qualify for and can take months to get home healthcare business funding.

There are many 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 best or established businesses, you could get approved as a startup.

SBA Loan Costs

SBA loans for home healthcare business funding typically carry these costs:

• Interest rate: 8% to 11%
• Prepayment penalty: None and you can save money by paying it off early
• Origination fee: 0.5% to 3.5%
• Loan packaging fee: $2,000 to $4,000
• SBA guarantee fee: 2% to 3.5%

While the interest rates are more affordable than other home healthcare business loans, the fees are much larger. This means that an SBA loan is best for long-term financing like investing in a fleet of vehicles or purchasing commercial real estate for your business. It can be an expensive short-term solution, because of the high upfront fees due at origination.

SBA Loan Terms

SBA loans for home healthcare business funding will generally carry these terms:

• Loan amount: Up to $5 million
• Repayment terms: Up to 10 years
• Repayment cycle: Monthly
• Time to funding: At least 30 to 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 be able to get. Home healthcare businesses have lower long-term capital needs than other businesses. However, you can plan for growth if you can qualify for repayment terms up to 10 years and up to $5 million in home healthcare business funding.

SBA Loan Qualifications

The minimum qualifications for an SBA loan for home healthcare business funding are:

• Minimum credit score: 680
• Collateral: Typically required
• Down payment: At least 10% to 20%
• Time in business: Any, from startups to mature businesses

Home healthcare businesses will find it easier to qualify for an SBA loan than many other industries because of the consistency and growth opportunity of your business. You’ll need a personal credit score of at least 680, but startups and newer businesses can qualify for a loan. The major difference between SBA and short-term loan qualifications is that an SBA loan will require a down payment and collateral.

What Is Missing With an SBA Loan

SBA loans are a great financing source for home healthcare businesses looking to grow through acquisition. However, these loans require up to 90 days to close and have an extensive application process which could take you away from your business operations. For a faster funding solution with long repayment term, we recommend getting a short-term business loan instead.

Where to Find SBA Loans for Home Healthcare Business Funding

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, however, you can expect to wait a few months before you receive funding. For major expenditures and long-term repayment, this could be worth the wait for a growing home healthcare business.

Three Ways to Improve Your Loan Approval Chances

Home healthcare is the fastest growing industry in the country so you have plenty of financing options. However, there are 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.”

Three types for getting approved for a home healthcare loan are:

1. Show Your Ability to Repay the Home Healthcare 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 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 make these debt payments. There are many 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 Your Creditworthiness

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

While your business credit score won’t always 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 you’ve decided in the past to make your credit payments is a good indicator you’ll do the same thing with your next loan.

3. Convince Lenders You Can Deal With Unexpected Circumstances

You need to convince lenders you’ll pay your loan payment first, no matter what happens. In the home healthcare industry it can be difficult knowing when you will 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 No. 1 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.”

Bottom Line

The home healthcare industry is booming and it can be difficult to keep up with the rapid growth opportunities and hiring demands. You need quick home healthcare business funding options you can access to help when growth opportunities become available. Your best loan option will be a short-term loan because it will provide up to $500,000 with the quickest funding time.

OnDeck offers short-term business loans up to $500,000. You can qualify if you have a 600 or higher credit score, at least one year in business, and $100,000 or more in annual business revenue. Its online application only takes 10 minutes and you can get funding in as little as one business day.

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