Loan arranger

Michelle Perrett seeks financial advice from a specialist who knows best.

The majority of licensees and new people who want their own pub will be looking at taking on a lease. Finding a freehold pub is becoming virtually impossible in the current marketplace, but the major pubcos are always searching for licensees to take on tenancies. Even taking on a tenanted pub is not necessarily a cheap option, however, with good pubs going for a premium.

Whether you are using a financial broker, a bank or obtaining funding from your pub company, all is not lost. Getting funding for a tenancy is not necessarily as complicated as you think. Chris Heard, director at Marlborough Leisure, the leasehold loan specialist, has some financial tips for licensees.

Top 10 tips on how to secure finance​

• Make a detailed list of your assets and resources​
  
  This should include cash, equity in a property, investments, life policies and any articles or possessions which could be sold to release cash

Narrow down the type of business (for example traditional pub, food-led operation, leasehold or tenancy) and preferred location​

Speak with a specialist licensed trade financial adviser. Take into account the type of business and your experience in the trade - or lack of it - when considering the price range you should be looking at and the amount it would be both possible and prudent to borrow

Contact specialist agents​

Ensure that the agent has as much information as possible relating to your specific requirements and keep in constant contact so that they know you are a serious buyer

Begin work on a draft business plan​

This will help concentrate your mind on the important financial issues which need to be covered when going through the loan application process

Prepare a CV​

This should include details of your experience to date, both in and out of the licensed trade, and make reference to your ambitions in the trade in general. You should demonstrate how you think your skills can be applied to make the target business a financial success

Honesty​

Always tell the truth, as negative facts, such as a small blip in credit history, can sometimes be overlooked if there are sufficient and substantial positive features to your case

Prepare a SWOT (strengths, weaknesses, opportunities, threats) analysis​

When you have found a specific business in which you are strongly interested, prepare a simple SWOT analysis by researching the business and the area in which it is situated.

Do not rush into the first good business you see or read about but approach each prospect with a critical eye and ask yourself "would it really be the right one for me?"

Bear in mind your abilities, experience and resources

Budget! Budget! Budget!​

Prepare a detailed cashflow forecast and take into account seasonal trading variations, capital expenditure, unexpected contingency occurrences, realistic gross profit margins, employment costs and, most importantly, your personal spending requirements on a monthly basis

Use licensed trade specialist professionals wherever ​
possible​

Use specialists, as their work will be much more acceptable to your proposed lender. There are many firms of solicitors, accountants, surveyors, and valuers who either do nothing but licensed leisure work or have specialist departments in the sector

Protect your credit status​

Credit agencies now have an incredibly sophisticated system of recording each and every credit transaction in your day-to-day life.

It is therefore essential that all mortgage and loan repayments are made on time in full, and monthly credit and store card payments made on time and for, at the very least, the minimum specified amount.

It will also be necessary to produce at least six months of "clean" bank statements. All lenders scrutinise this information extremely closely.

Banks are aware that licensed trade lending has a high casualty rate and are therefore much more comfortable with a proposition which has been appraised and packaged by a professional company. All lending decisions and conditions of lending (interest rates, fees, number of years, special conditions, etc.) are a reflection of perceived risk.

If the proposition is presented in a researched, convincing and detailed package, then the lender will feel relatively safe and offer attractive terms or, quite simply, lend where in other circumstances the proposition would be rejected.

For more info see: www.marlboroughleisure.com​