Allica Bank has announced rate cuts of up to 0.75% on commercial mortgages for healthcare businesses, as part of a move to boost investment and growth across the care and early years sectors.

The challenger bank, which focuses on lending to established small and medium-sized businesses, said the new rates would apply to funding for care homes and children’s day nurseries.

Rates on care home premises will fall by as much as 0.50%, while operators of children’s day nurseries will benefit from reductions of up to 0.75%.

The bank said the move was designed to help operators access more competitive finance to acquire, expand or modernise their premises. It follows feedback from its network of brokers suggesting continued optimism in the early years sector.

In Allica’s own Q4 2024 broker survey, nearly two-thirds (64%) of the 692 commercial mortgage brokers questioned said they expected growth in the children’s day nursery market in 2025. Demand for funding in the sector has remained strong this year and is forecast to increase into 2026.

Anthony Newman, senior specialist relationship manager for healthcare at Allica Bank, said the rate reductions would help operators overcome long-standing financing barriers. He said: “Healthcare operators play a vital role in communities across the UK, but many continue to face challenges accessing the finance they need to expand and modernise their services.

“These changes are designed to give them greater flexibility and confidence to invest, whether that’s acquiring new premises or upgrading facilities.”

He added that the latest move reflects Allica’s commitment to adapt its lending approach to meet the needs of healthcare businesses. “By continuing to evolve our lending proposition, we’re making sure healthcare businesses have a banking partner that listens and responds to their needs, helping them deliver the essential care and services that their communities rely on,” he said.