Finding the right solution

There are several finance options available to licensees

FINANCE is the lifeblood of business but it’s no secret that times have been tough for many on-trade operators, with access to funds limited in recent years.

• Finance firms suggested attending any meeting armed with the right financial information.

While money doesn’t grow on trees, a number of firms providing finance to the on-trade reckon there are options for operators looking to get a foot on the fiscal ladder.

Paul Smith, corporate development director at Barclays, Scotland, suggested on-trade operators make their bank the first port of call when seeking out finance.
“It is always sensible for clients to sit down with their bank in advance to discuss future plans for the business and to review financial forecasts,” said Smith.

“This should help identify the most appropriate funding solution for the business.”

It’s important to carefully consider the amount of debt that is affordable.

While there’s no doubt approaching the bank for a loan can be a daunting prospect, Smith pointed out that there are a variety of finance options available from more traditional sources.
“Term loans are a useful option for licensees who own commercial property assets to borrow against,” said Smith.
“They have become increasingly flexible and can be tailored to operators’ individual needs.”
He added that those in need of shorter-term funding could investigate overdraft options.

“Such facilities are generally simple to manage and can help mitigate the impact of fluctuating cash flow at different times of the year,” he said.
Banks can be good for business, but not all will be forthcoming with funds for every operator, according to Martin Cairns of Tennent’s.
The brewer’s trade investment manager reckons that for licensed trade operators, “going through the traditional avenues of banks and building societies is becoming increasingly more difficult”.

Cairns suggested that on-trade operators also consider getting in touch with Tennent’s as the brewer can offer lending assistance on a “broad range of projects”.
“We’ve supported a range of projects such as adding kitchen facilities and updating signage, to acquisition of new outlets and the refinancing of existing borrowings,” said Cairns.

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Is Brexit bad for finance?

“At the end of 2016, we conducted a survey on 200 SMEs to learn about their plans and concerns for the new year.
“Brexit was listed as one of their main challenges, along with industry competition and expansion costs.”
– Liberis

“Our lending availability and approval rates have remained steady since the EU referendum and we continue to lend to an SME business in the UK on average every four minutes.
“That’s not to say there isn’t uncertainty and many businesses will be looking at their future plans and resilience of their finances.
“At times like this clients need the support and advice of their bank more than ever and we are fully committed to guiding them through.”
– Paul Smith, Barclays, Scotland


Whatever finance route operators choose to pursue, Cairns suggested the first priority should be to secure the best overall deal “in terms of all the support a lender can provide for your business”.

“It’s also important to carefully consider that the amount of debt is affordable – don’t try to grow too quickly if you’re enjoying success, and take on too much debt too soon, thereby putting yourself under pressure,” he said.
The key thing when seeking out finance is to be prepared, according to Cairns, who recommended operators only approach lenders when they have a “clear plan” on how their investment will be used.

“It’s important to have a business plan or projections supporting this, and up to date trading accounts for the business, but demonstrating understanding of the project, how you will make it a success, and the costs involved is crucial,” he said.

However, the individual requirements may be different depending on the applicant’s experience, said Jon Williams, director of Satellite Finance.
Williams said that a new operator may well be required to produce a full business plan and financial forecasts, whereas an experienced operator “is likely to be a limited company with accounts filed in the public domain and access to recent bank statements, so not as much information will be required”.

A spokesman for alternative finance firm Liberis acknowledged that accessing finance for a small business “can be a daunting prospect”, but he suggested that the growing alternative finance market could provide solutions.
“Luckily the market of alternative finance has grown to become incredibly vast in recent years, with options available to suit almost any business owner,” he said.

“It’s important to research the different routes and find a funding solution that works in line with your business and your vision; whether it be crowdfunding, venture capital, or a business cash advance.”
A spokeswoman for Liquid Finance, an alternative finance firm which is able to offer business cash advances, agreed that operators should investigate a variety of funding solutions.

The spokeswoman added that a cash advance in particular may be best suited to operators embarking on more short-term projects.

The alternative finance market has grown to become incredibly vast.

“A cash advance is best suited to projects like refurbishment, renovations, expansion and new stock lines and pay back is typically around six to nine months,” she said.

The variety of financial products on offer to publicans may make it possible to get a deal, but operators should still exercise caution, according to Liquid Finance. The firm’s spokeswoman suggested operators seeking finance ask questions of finance firms and colleagues to ensure everything is above board.
“Operators should be cautious when taking out funding – ask questions, find out what your peers are doing, talk to your financial advisor, ask about customer testimonials and reviews,” she said. “Most reputable companies will be more than happy to provide customer referrals and quotes.”