Note: The contents of this article are the author's opinion and have not been approved as a financial promotion.
Our latest research – covered by the likes of City AM and the Daily Express – reveals that the amount of money lent by UK pub and bar owners to keep their own businesses afloat last year hit £138 million.
Our study shows that 1,730 UK pubs and bar companies ran so short of cash and other finance that their directors had to make loans to them from their own personal resources, with many loans being above £200,000.
Many pub and bar owners were left with no option but to lend money to their own businesses, in spite of Government backed lending schemes such as CBILS and BBLS.
Pubs and bars, even those operating at a profit, have found it increasingly difficult to borrow over the last decade, as high street banks tightened their lending criteria for businesses they deem to be ‘high-risk’ borrowers and limited their lending to SMEs.
Owners of pubs and bars may have found it difficult to access funds through CBILs and BBLs as lenders favoured other sectors such as tech and healthcare. This is likely to have prompted more owners of pubs and bars to put their own money on the line.
However, given the surplus of lower cost leisure space available, there is clear scope for pubs and bars to see a profitable rebound, provided they have access to the funds necessary to enable them to grow.
Steve Talbot, Investment Director at Growthdeck, says:
“The pub and bar sector has endured a difficult 18 months. Many owners have had to use their own money to stay in business as traditional funding options have been restricted.”
“However, the hospitality sector now faces a unique opportunity. The impact of the pandemic on the High Street has led to an excess of prime sites at attractive rents and much less onerous lease terms.”
“A lot of competition has been removed from the industry and the prospect of a bounce back in trading for the right concepts looks strong.”
Earlier this summer, we closed £4.3m of growth funding for new bar group Maven Leisure, completing our largest single raise to date.
Maven Leisure is looking to open at least seven premium bars in central London supported by this fundraise, and will be taking advantage of very favourable conditions for acquiring prime landmark London sites.
Steve Talbot adds:
“Pub and bar companies with access to the right finance have an excellent opportunity to expand and grow. Investors should not underestimate the considerable growth potential of the hospitality sector.”
* Coffer CGA Business Tracker
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