There are a number of key things borrowers can do to improve their chances of obtaining secured funding in the leisure sector, so B&C spoke to Richard Beenstock, Managing Director at Ortus Secured Finance, the specialist leisure sector lender, to find out what Ortus looks for when evaluating borrowers’ applications.

Richard says that although they evaluate every deal on a case-by-case basis, there are certain key criteria which can assist a borrower when presenting a proposal that can make the difference in whether Ortus take the case forward.

Loans can be secured for hotels, restaurants, and pubs, to name but a few options, but can also depend on cashflow and the length of a lease in some instances.

Provide full details up-front

It is important that borrowers are thorough with their background information from the beginning. "Bad" news is not necessarily a problem as long as it doesn´t come as a surprise to the lender late in the process. Richard likes to receive a CV and preferably it should demonstrate that the applicant has the relevant experience for the type of activity he/she is looking to secure funding for.

Detail all the relevant information on the transaction

The application should include information about the property/site being acquired/refinanced, such as purchase price, , why it up for sale, who is the seller, how long it has been on the market, borrower’s knowledge of and involvement in the property.

Robust valuation is essential

An up-to-date valuation report helps to speed up decision making. Ortus Secured Finance is often presented with cases where an asset is being acquired at a significant discount to market value. It is not always obvious why the seller is happy to sell at such a discount and in general purchase price is market value. If there are plausible reasons for why that is not the case, it needs to be addressed thoroughly in the valuation report.

Explain serviceability

The borrower needs to explain how he/she intends to service the debt and any cashflow projections need to be based on realistic assumptions. It doesn´t reflect well on the borrower if they are putting forward pie in the sky forecasts.

Demonstrate a realistic exit route

Bridging lenders are ‘what it says on the tin’. They are not there for the long term and they need to have confidence in the borrower’s ability to repay the loan on time. It is important that the borrower thinks about the exit route from day one and not when the loan is about to mature.

Hire professional advisors

An experienced broker and a competent lawyer can often make the difference, whether a deal completes smoothly or hits stumbling blocks. It is worth spending sensibly on advisors to ensure a smooth process and a successful end result.