Loan volume up as prices get realistic

Christie Finance secured an extra £4.6m worth of pub loans last year, compared with 2010 — it saw £21.5m being loaned in 2011, up from £16.9m in the previous year.

However the average loan fell 10% year-on-year to £256,000. The firm also reported increased activity in the second half of the year, which it puts down to better negotiations and landlords selling at realistic prices.

It bodes well for the industry in a climate that often spells difficulties for businesses trying to raise adequate funds.

Christie Finance said that new banks such as Shawbrook and the Government’s

Project Merlin deal, whereby banks have pledged to lend £76bn to small and medium-sized business, has helped.

David Grant, director and head of UK business mortgages, explained that a lot of multi-site operators have been successful in obtaining property with cash and then refinancing that property.

He said: “We did see an increase in the amount of loans we were able to secure, but this could be because we sit in-house with our sister company, Christie+Co.

“Most deals have been smaller ones, so operators that have one or two pubs have been able to buy property with ready cash and then quickly refinance it.”

Paul Thompson of Acorn Finance said that the company has seen a higher volume of successful loans; however he explained that the market has changed in terms of the type of lenders now available, such as Shawbrook.

“We are finding it easier to get funding for sitting tenants, even those with as few as six months’ trading figures, provided they traded well. But it’s still difficult.

“We’re seeing a lot of people with high debt levels folding their business and then trying to buy it again at a lower price. This is definitely something that the lenders are not keen on.”