Emma Gibbon, who operates the Plough, in Prestbury, and the Hewlett Arms, in Cheltenham, has taken to social media after being refused credit despite the promise of funding.
Gibbon said: “I know other publicans are having similar issues with accessing the funding they need to invest in their business.
“Be it small business loans or finance agreements, it seems lenders are turning away from the hospitality industry due to its fragility.”
She explained the bank her and husband Paul have used for 12 years had previously told them they were pre-approved for a £100,000 unsecured borrowing facility but when it was needed, they were shunned.
Standing still not an option
“We had earmarked £25,000 of this to put towards a new investment we are undertaking with Punch. It would help us with the stamp duty for our new 10-year lease as well as furnishing a newly built garden room project.
“This investment is to help us build the business because we have decided standing still in the current climate is not an option. We have to be busier, we have to grow and the only way to do this is invest in more indoor seating.”
Having been told the loan was pre-approved and could be in their bank the next day, the couple were in no rush to take the credit because they didn’t want to start paying a loan and interest until really needing the funds.
However, when it came to filling in the online application, Gibbon explained: “It was a ‘computer says no’ response. I contacted our bank manager who informed us that actually as we are pub/hospitality-based, there is a cap on lending that was already taken by our overdraft facility.”
Lenders won’t risk it
She added the overdraft facility is not even being used but is needed for winter months’ cashflow and continued: “[There was] nothing [the bank manager] could do and we couldn’t have the loan. We are now in a situation where we need to find the funds quite quickly to help finance our investment but now many lenders won’t risk lending to the industry and those who do so will charge sky high rates for the pleasure. It feels like we are left in the cold at every turn.”
Gibbon suggested the Government could help the trade and SMEs by encouraging banks to offer low-interest investment loans for purposes similar to that of the bounce back loan.
“Or [the Government could] make money available for grants to allow businesses to grow,” she said. “This could unlock potential for thousands of successful pubs and bars to invest in their businesses and raise more revenue to swallow the increased cost pressures that the current Government keep piling on.
“It’s not just loans but finance on things like coffee machines, credit agreements and even some energy companies have almost blacklisted hospitality businesses with many publican having to risk their own personal credit ratings with credit checks, searches and guarantees. Do any other industries get treated like this?”
