Many charitable care operators  face significant investment requirements over the next few years. Many providers need capital to invest in existing homes, reprovision facilities no longer fit for purpose, or develop new assets to make their businesses more resilient and viable for the long term.

Securing funding is expensive and brings new risks.  Unlike sectors such as social housing, where lenders are familiar with the operating environment and benefit from a long-established lending market, care providers operate in a sector characterised by greater operational complexity. Workforce pressures, regulatory requirements, occupancy risks, and working with vulnerable clients and residents all contribute to a risk profile that many lenders perceive as more challenging. As a result, the pool of potential funders can be smaller, while borrowing terms may be more restrictive and expensive.

A credit rating from one of the globally recognised agencies  provides an external and impartial assessment of an organisation’s financial strength, governance, operating performance and long-term resilience. Borrowers can use the credit rating to give lenders confidence about the business and their approach to borrowing, supporting access to more competitive sources of funding.

What the webinar covered

The webinar explored why a charitable care provider might seek a credit rating, how a rating can support funding, treasury and investor engagement strategies, and what is involved in obtaining and maintaining a rating. Fitch Ratings explained its methodology for UK residential care providers and outlined the rating process from initial engagement through to publication. 

The session also considered when a rating may be appropriate, recognising that it is not the right route for every organisation. The process requires careful preparation, senior management time and resource in gathering historic and forecast information. Boards will therefore need to weigh the potential benefits against the costs and practical implications, including the organisation’s scale and the size of its future funding requirements.