Privately-run Hinchingbrooke Health Care Trust has applied for a £3.5m “working capital loan” from the Department of Health to help “accelerate” its capital programme, HSJ has learned.

Circle, which runs the financially challenged trust, is devising a package of measures to fund the £7.8m capital programme at the same time as attempting to make £7m savings on revenue costs.

Hinchingbrooke is also selling the land on which its car park is situated to raise an estimated £3m for the capital budget, according to minutes from its April board meeting published last week.

A Circle spokesman told HSJ the money was being sought to cover plans to refurbish Hinchingbrooke’s critical care facilities which have been in place since before the company took over the franchise last year.

“The application has been made to the [NHS Trust Development Authority], who will make the decision on it in the next few months,” he added.

All NHS trusts are entitled to apply for working capital loans via the TDA, which receives initial applications for the loans from the DH. However, the authority said it has only received one other application of this kind since it was established in April.

The TDA refused to reveal the terms under which the loans are offered citing commercial confidentiality but a spokeswoman said such loans were considered for trusts “where significant investment is required”.

A report discussed at Hinchingbrooke’s July board meeting said it still expected to pay down its £3.7m budget deficit in 2013-14 after hitting first quarter financial targets.

However, the document also said high activity, including “some concerning trends” relating to emergency pathways, had delayed plans to reduce bed numbers.

The report, by interim chief executive Hisham Abdel-Rahman, said: “The consequence of this is that higher than planned levels of temporary staff have been required and this in turn has absorbed the additional income generated.

“The trust is working with its commissioners to gain a full understanding of the reasons for increasing activity and to reduce expenditure on non contract staffing.”

In May Hinchingbrooke announced its then chief executive Jim O’Connell was taking early retirement after one year as in the job in which it failed to hit a target to wipe out its budget deficit. Circle said Mr O’Connell’s decision had not been performance related.