BII plans financing boost for licensees

The BII (British Institute of Innkeeping) is eyeing plans to facilitate small-scale financing for licensees and pub owners, via a third party, for those who make a persuasive business case.

It is in response to continuing reports that banks are unwilling to lend to the sector via ordinary means, BII chief executive Neil Robertson confirmed.

Robertson has been in discussions with an international and a national brewer, as well as a bank, about the provision of 'mezzanine loans' for BII members.

These loans are typically used for supplementary financing when not enough money can be raised by other means.

They give the lender the right to an ownership or equity interest in the company if loan obligations aren't met.

Robertson said that one idea is for the provider to suggest a lump sum, with the BII deciding who gets the money based on each individual case. "It would be like The Apprentice, but better," he said.

The planned service could be used by a pubco tenant wanting to buy their freehold, or simply for the purchase of a new freehold venue. If a brewer supplied the finance, a drinks-supply agreement could be entered into as a condition of the loan.

Robertson explained that lenders would trust the BII's experience of what makes a good operator when it decides who gets the loans.

He described the feedback from potential lenders as "very positive".

Robertson added: "We've got lots of members who are good operators. The banks should lend to them ahead of somebody else."

In recent weeks the MA has reported licensees being told that their banks won't lend to pubs.

This is despite major banks making commitments with Government to make £72bn of loans available to small firms under Project Merlin.

• Is your bank refusing to lend to the sector? Email

thewvg.qrtha@jeoz.pbz​ or call 01293 610234.