Finance broker sets up new facility to lend against closed pubs

The Pub Reopening Facility (PRF) has been set up by Acorn Commercial Finance which allows buyers to gain lending from a bridging finance company for a short-term to buy a freehold. After trading for approximately six months, Acorn will help the licensee repay that company by remortgaging the pub with a long-term lender.

Paul Thompson of Acorn Finance said that in order to do this, Acorn will have “sufficient data to be able to arrange the remortgage with a long-term lender”.

He added: “We’ll be looking for a regular trade of a certain level to show the mortgage can be repaid
from the pub, without reliance on external support.”

Thompson explained that he had been working with lenders for a few years to get the scheme up and running.

However, he stressed that there will be some stringent lending criteria, such as: having to be “highly successful” in the licensed trade having traded their own business for some years; having an acceptable credit history; producing a strong but realistic business plan (in brief); and being able to put down a deposit of around 40% against the purchase price of the pub.

Licensees can take on any closed pubs, including bank repossessions and pubco disposals, either closed or in temporary management.

“The scheme will appeal especially to lessees looking at their first freehold purchase as prices are historically low and the income from their leased pub would help with the cash flow requirements going forward,” said Thompson.

Last week, James Baer, managing director of multiple operator Amber Taverns, said that pub finance was a bigger issue for the pub sector than beer duty, the smoking ban and supermarket pricing. He said that the financial debt that pub companies are in has led to under-invested pubs.