Lending still so tight | Scottish Licensed Trade News

Scottish Licensed Trade News

Lending still so tight

A FINANCE broker with 25 years experience lending to the trade can’t recall a time when it was so difficult for operators to access finance.

Charles Mackintosh, former head of lending at brewing giant Carlsberg and now owner of Springmount Finance, said the trade’s traditional route to lending through high street banks is now almost closed for many businesses.
And although new players willing to lend have emerged, he said the terms are much stricter than those available before the banks were bailed out in 2008.
“I’ve been lending into the trade for 25 years and I would say it’s the most difficult time that I’ve experienced, simply because the recognised names on the high street have got their own internal issues to address,” Mackintosh said.
“They are also not disposed to [lending to] the sector simply because of some of the bad debt experience.
“There are certainly new lenders coming in, such as Shawbrook Bank, who will lend into the sector, but certainly on much more restricted loan to value criteria than people who were borrowing money five years ago would be familiar with.
“A lot of this is underpinned by the risk associated with the licensed trade but also the cost and availability of capital for lenders.”
That some brewers have altered their own lending strategies is another headache for the trade, added Mackintosh, who stated that while some are publicly open for business, others are being “circumspect”.
Despite the challenges facing operators over access to capital, Mackintosh told SLTN, “there are certainly deals out there to be done”.
“Where the borrower is of the right quality, has some access to equity and the business is sustainable and has some scale, then there are opportunities to borrow,” he said.
“But lenders are being much more circumspect. Five years ago you had to tick 50% or 60% of the boxes that needed to be ticked from the lender’s perspective, you’ve now got to tick 100% to get the deal done.”

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