Tied pubs get loans lifeline
Licensees of tied pubs who can't secure bank loans may have been thrown a lifeline.
In an early victory for the Morning Advertiser's Buck Up Banks campaign to urge banks to loan to pubs, ministers have agreed to include tied pubs in a scheme where the Government guarantees 75% of loans.
Banks cover only the remaining 25% - meaning there's less risk in offering vital loans to help struggling pubs.
Free-of-tie pubs are already eligible under the Enterprise Finance Guarantee scheme, which was launched in January.
Eligible firms, which must have turnover of less than £25m, can borrow between £1,000 and £1m under the scheme.
The news follows stories in the MA of angry licensees being told by their banks that they have a policy of not lending to pubs.
Licensing minister Gerry Sutcliffe called for tied pubs to be included in the scheme in discussion with ministers at the Department for Business, Enterprise and Regulatory Reform.
He said: "I know that a lot of pubs have been having difficulty getting bank loans to expand their businesses. Pubs are often the lifeblood of communities and I am keen to do what I can to help viable businesses while times are hard."
Loans would be available via usual high street banks.
The guarantee will cover the following types of lending:
• New term loans (with terms of between one and ten years)
• Existing lending where lenders might not otherwise refinance the debt conversion of part or all of an existing utilised overdraft into a term loan in order to release capacity in the overdraft to meet working capital requirements. This would be conditional on the lender being prepared to continue to provide an overdraft and the serviceability of both the term loan and the overdraft.
The move is a boost for thousands of licensees who are suffering cash-flow problems or need funds to invest in their businesses. Concerns remain, however, about how the scheme works in practice.
The Federation of Small Businesses (FSB) is concerned that individual bank branches are not showing enthusiasm for the initiative, and accessing loans via the scheme can take a long time.
Greg Mulholland MP, who chairs the All-Party Parliamentary Save the Pub Group, said: "This is a welcome first step, however the Government, and crucially the banks, must follow through on this.
"Many small businesses who already qualify are struggling to access funds through this scheme, so the Government must make sure that pubs can actually receive this vital credit lifeline.
"With the difficult trading conditions at the moment, the thought that any local pub might close because they are not getting help from the banks is simply unacceptable".
• Have you tried to access loans via the Enterprise Finance Guarantee scheme? Let us know how you found the process by sending an email to wbua.uneevatgba@jvyyvnz-errq.pb.hx
