News Article Comments : Need funding for a pub? Ask your friends

Presenting a solid business plan or clubbing together with friends can prove the best way to finance buying a pub.

That’s the view of agents and brokers as major high-street banks appear reluctant to lend to pubs and other hospitality businesses.

The Bank of England has released a survey stating that lending to the commercial property sector has reduced significantly since the last quarter. In addition, licensees have told the MA in recent months that well-known banks are telling them they won’t lend to pubs as they see the sector as too risky.

“Banks are overexposed to commercial property. There is only £2bn of lending to the sector compared to £36bn before. Loan to value used to be 80:20, and now it’s 60:40,” said Andrew Watt, head of licensed leisure at Colliers CRE.

“More people are turning to ‘private banking’,” said Watt. “By this I mean friends and families, communities and networks of business people.”

Watt advises potential licensees to have, “a first-class business plan