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Finance
June 27, 2023
4

Why Independent Schools Are Investing in Excellence with Asset Finance

Key take away points:

  • Benefits of asset finance solutions for independent schools.
  • What assets or projects can be financed?
  • Making the right choice for your school.
  • Radnor House: a case study.

At the time of writing in June 2023, the UK’s inflation rate is 8.7%, more than four times the Bank of England’s target rate of 2%. This is increasing the staffing costs, property costs, utility costs, and general running costs of independent schools in the same way it is impacting other organisations.

Parents who are paying for their child’s education will not accept a drop in the quality of the school’s facilities or resources, and when they are personally experiencing the pinch of increased living costs, they are more likely to be assessing the value of an independent school’s offering in terms of their child’s education and development.

The result? Independent schools are under increased pressure to perform in an already competitive market while budgets are tighter than ever.

So how can an independent school continue to innovate and improve their facilities and attract new students while staying financially stable?

Asset finance for Independent Schools

When making the decisions invest in their facilities and improve their educational offering, governors and bursars of independent schools need to weigh their options carefully. This includes considering the longer-term financial viability of a project, specifically if the school can pay for the project while maintaining financial stability and security.

Asset finance enables independent schools to spread the cost of investment over a period of time to suit their financial plans, e.g., on a termly basis to coincide with income from fees.

When able to break up the total cost of a project into a series of fixed affordable payments rather than parting with a lot of cash all at once can be a financial game-changer for schools, enabling them to get what they need to provide the highest standards of education to their students. The retained capital can then be used to fund other areas of development or kept in the bank to improve financial stability.

Benefits of asset finance for independent schools

  • Preserve working capital: Access the latest equipment, technology, and facilities, without having to face the high upfront cost of purchase, preserving cash reserves for other essential running costs.
  • Flexible solution: Asset finance can be tailored to meet the specific needs and budgets of each school, allowing for a flexible approach to financing that can be adjusted as circumstances change over time.
  • Improved cash flow: By spreading the cost of acquiring assets over time, schools can improve their cash flow, as they will not have to bear a large upfront cost. This can also help reduce the impact of fluctuations in their budgets.
  • Up-to-date equipment and facilities: Regularly upgrade your equipment and facilities to provide the latest and most effective teaching resources to their students.
  • Attract more students: Ensure your educational offering is a cut above the rest to attract more students and maximise income from fees.

A New Hockey Pitch for Radnor House Sevenoaks School

Radnor House Sevenoaks is a private co-educational school in Kent that caters to pupils aged 2-18 for Nursery to Sixth Form Education. In addition to academic studies the school prioritises extracurricular sports activities including hockey, football and cricket.

To compete against other schools in the local area, Radnor House Sevenoaks School secured planning permission to build a state of the art FIH approved floodlit hockey pitch. In addition to the sports pitch, the school also wanted to add a coach to their fleet for school runs and sports transport and a company vehicle, as well as provision of Microsoft Surface devices to all Senior School pupils.

The school had embarked on a major capital expenditure program totalling over £5m, so utilising finance to retain cash on the balance sheet would allow them to see a return on their investment sooner rather than later.

Bluestone worked closely with the school to understand their project needs and find a finance solution that best suited them. We were able to finance the school’s sports pitch, a minibus, a company vehicle and facilitated IT equipment upgrades.

The solutions allowed students to compete and make the most of the new sports pitch, provided them with a means of transport with the new minibus and access to new IT equipment to support their learning.

“Because of Bluestone’s consultative approach to financing, we were confident and felt fully informed throughout. We knew that we were working with industry experts that could deliver on the project.”

Neil Moulding, Finance & Operations Director, Radnor House Sevenoaks School

What assets or projects can be financed?

Finance solutions can help independent schools fund a wide range of assets from state-of-the-art technology or IT equipment to new playgrounds, sports pitches, and property development. Here are just some of the examples of assets that an independent school could finance.

  • Buildings and facilities (classrooms, auditoriums, sports fields)
  • Furniture and equipment (desks, chairs, laboratory equipment)
  • Technology (computers, software, networking equipment)
  • Transportation (school buses)
  • Land and property
  • Library books and materials
  • Energy-efficient upgrades (solar panels, HVAC systems)
  • Renovations and expansions
  • Playground and recreational equipment
  • Art and music resources (instruments, supplies)

Making the right choice for your school

No matter what type of funding is you decide to proceed with, an independent school, as the borrower, needs to understand and agree to the terms of the finance agreement. This will include:

  • the total amount of money being borrowed
  • repayment dates
  • fixed interest rates
  • arrangement and other fees
  • any construction requirements, and
  • security requirements e.g., personal guarantees.

We can help you navigate your finance options, weigh the pros and cons, and help you find the most appropriate funding solution for your project.

At Bluestone, we understand that financing your school projects can be a challenging task, especially with limited budgets and tight timelines, but we are here to guide you through the process from start to finish. Our wide network of lenders can offer you competitive rates, flexible terms, and fast approval times, to get you the funding you need quickly and efficiently.

Planning to invest in your independent school? Contact our team today to provide your students with the best possible educational experience you can without depleting your budget.

BS.202309.01BL70
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