Last-minute funding for a country club

The UK leisure sector is fiercely competitive - and businesses in it can experience volatile trading. A club or bar that is on-trend one month can find it is out of favour the next. There is very little that can be done - other than provide the best possible experience and facilities for customers, and build repeat business.  

However, the problem can be made worse by the fact that the business sector is seen as a major risk by many lenders. 

We were recently approached by a country club operator with a large business on the outskirts of London who was committed to a major programme of improvement to overcome a shortfall in predicted profits - but whose bank pulled out of lending at the last minute. 

The challenge

The client had large premises in a converted country house, and in the past had enjoyed some very profitable seasons. However, in recent years, customers were not coming in the same numbers as they had done previously.

The problems were getting worse, and with takings almost 50% down on the previous year, the client looked at the possibilities of investing in his business.

He decided that the best approach would be to create a spa, which would support him in extending his customer base. It would mean bringing more people into the spa during the day when business was at its slowest.

Some, he hoped, would stay for the evening when the bar and restaurant could offer more sources of revenue. He looked at the space he had available and found a company that could fit out some underused space as a spa area, complete with treatment rooms and a pool.

“The health market is growing and I believed that we could tap into it. There are plenty of opportunities for spa businesses with the affluent female market which I hoped we could attract.”

He approached his bank and explained his business proposition and they were, initially, very positive. They saw how the country club could capitalise on the extra custom a spa would generate. They saw no problem in advancing £80,000 to cover the work, based on the profits the club had historically generated. The owner gave the contractor tasked with converting the area the authority to proceed, and preliminary work on stripping out the spa area had already begun when the bank dropped its bombshell. 

The bank had looked more closely at the club's preliminary accounts for the last year, which had just been prepared, and withdrew the loan offer.

“They felt that the profits had fallen so dramatically that the club was in trouble - but now, they were not just no longer prepared to help me put the business back on its feet, they had left me with a major liability. Worse, I had a builder who had already started work to pay.”

This last-minute change meant a crisis for the business, and the owner was desperate for a solution - and to find a lender who was prepared to advance the funds required. He knew that Rangewell had contacts across the entire lending market, and hoped that those contacts could provide the funds he needed. 

Are you looking to bring your business up to date? Experienced a drop-off in trade that would be solved by a business refurbishment? Find out more about the solutions available

How Rangewell helped

We looked at our lenders to see which if any could fund a package of lending which could provide £80,000 at short notice - and we recognised that we were facing a serious challenge. Lenders saw the same potential affordability problems that deterred the bank and were unwilling to lend.

We approached lenders who specialised in solutions for the leisure sector. However, it soon became apparent that they were unable to secure the funds required when they looked at the company’s accounts.

However, although no lender was prepared to provide the full £80,000 we are able to secure smaller loans - of £50,000 and £30,000 - from two separate lenders.

Both lenders demanded high rates of interest - with 15% and 20% respectively - because of the risk the client presented. However, we were able to negotiate an early repayment option. If the client was able to repay his loans early, he would not face any penalty - substantially reducing his costs. 

He was able to get the work completed and open his spa - and has already seen business pick up as a result. He is confident that he will be able to make full use of his early repayment clause - and that his investment in his business will more than pay off. 

At Rangewell we know that getting the agreement that is right for your business can be essential to keep costs down. We can help you arrange all types of business funding - including finding solutions when your business circumstances are challenging.

Call us if your clients face a retail funding challenge - we can help you find the answers you are looking for.