With the economy picking up, operators are advised to review their funding and debt options, writes Adrian Foster of Christie Finance
SECURING finance in the hospitality industry has been perceived as being difficult over the last few years.
However, we have certainly seen that situation change for the better in the last six months, with all leading banks much more willing to lend to good existing operators as well as new entrants with solid experience.
With the Bank of England base rate at an historic low, existing operators are recognising that now is a great time to review their existing finance options and to look into the potential of refinancing their existing debt as they realise that, due to the economic recovery, the base rate is only going to go one way, although there is still uncertainty over when that will happen.
Now is a great time to review existing finance options and look at refinancing.
Over the past few months, we have been approached by an increased number of existing operators who are looking for help in reviewing their finances as they know the benefit of using a leading broker who will approach a wide range of lenders in order to secure them the best deal and to tailor make the funding package to meet their specific requirements.
We have found that the main reasons for clients looking to refinance include:
A breakdown in a client’s relationship with their current bank
Traditionally operators remained with their existing bank for the long term as they felt that this would provide them with some degree of loyalty.
However it has been a difficult time in the hospitality industry over the last few years and a lot of operators have felt that they have not received the level of support that they deserved from their existing banks and as such they have decided that now is the time to move their existing business.
Current banks’ appetites for lending in the hospitality sector
Since the downturn, a number of banks have looked to reduce their exposure in the hospitality industry. This has meant that, through no fault of their own, some operators have been asked to move their existing banking arrangements to another lender.
Some operators have flourished during the downturn and some have realised that, as the market is getting better, now would be a great time to undertake their plans to refurbish or expand their current business. When these operators have approached their current bank to discuss their plans they have not been provided with the support that they require.
A lot of banks have reduced their exposure in the hospitality industry.
Rates have never been so low and with the introduction of the various different government schemes and initiatives some operators have realised that now is a great time to try and negotiate a lower rate by shopping around. We have been able to save numerous clients a substantial amount of interest whilst helping others to secure the funding they require to complete their existing plans to either refurbish or expand their business on competitive terms.
• Adrian Foster is associate director at Christie Finance.