Publicans loaned £138m to own businesses in battle for survival
Pub owners injected £138m in loans to their own businesses to keep them afloat during the pandemic.
Private equity investment firm Growthdeck found that some 1,730 UK pubs and bar companies ran so short of cash last year that their directors had to make loans to them from their own personal resources.
As hospitality venues battled Covid restrictions and months of shutdowns, many loans topped £200,000.
Publicans struggled to keep the lights on despite the existence of Government backed lending schemes including the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS), according to Growthdeck.
High street banks toughened their lending criteria for firms deemed ‘high-risk’ borrowers while lenders were more inclined to give the green light to other sectors including tech and healthcare.
However, an excess of cheap space on the high street means the licensed trade now has a “unique opportunity,” according to Growthdeck investment director, Steve Talbot.
He added: “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.”
Investors must “not underestimate the considerable growth potential of the hospitality sector,” the director said.
The country lost nearly a thousand pubs and restaurants since Freedom Day (July 19), when hospitality was freed from Covid restrictions.
At an average closure rate of 16 licensed premises a day, the figures from CGA and AlixPartners make stark the difficulties still faced by businesses.
Independently run pubs and bars accounted for nearly three quarters of all closures between July and September, reducing the indie sector in size by one per cent.