The owners of The Sycamores in Johnson Street, Blakenhall, in Wolverhampton, said they feel like they have been left with "no other option" and have spent the last few months working to find suitable accommodation for its 84 residents.
An official closing date for the home has not yet been confirmed.
Sharifa Lakhani, managing director of Holmes Care Group, which owns the home, said: "The Sycamores has been experiencing financial difficulties for a number of years, and there is no other option but to close the home.
"We will do everything in our capacity to ensure that the closure and moving process is as smooth as possible.
"The exact date of the closure of the home is dependent on the confirmation of all resident transfers and is therefore not yet confirmed.
"We have also brought in BKR Care Consultancy to work alongside the home during its closure, in order to ensure as smooth a transition as possible for all parties.
"BKR Care Consultancy specialises in working with care providers and local authorities, and the team has vast experiences in different settings.
"I would like to reiterate my apologies for the nature and timing of this news.
"The decision has been made to ensure the highest quality of care."
A member of staff at the purpose-built home, located on a quiet residential estate, said the process had been “very upsetting” for both residents and staff on the whole, but had been conducted very professionally and effectively.
“Before the outbreak of Covid, we were operating at full capacity, but since the closure announcement, I’m pleased to say we have managed to find a lot of our residents new homes,” said the woman, who declined to be named.
“Obviously, we are still working with the council to find places for people, but we are nearing the end of the process now I think.
“At the end of the day, everybody has been affected by the current climate and what has been going on with Covid. But it is what it is and we have to move on,” she said.
Councillor Paul Birch of Wolverhampton Council said: "As we are all aware, care homes have been put under tremendous pressure as a result of the epidemic.
"The government told us it was their priority to shield vulnerable people, but Britain leads the field in Covid deaths. Excess deaths in the UK have now surpassed the number of UK civilian deaths in World War II.
"The UK Government had ample notice of what to expect and were warned by the Italian authorities, but they did too little too late.
"That’s why private care homes like The Sycamores have had to retrench to protect their overall business.
"The Government have a lot to answer for."