Pub and bar owners’ loans hit £138m during Covid, finds Growthdeck

Pub and bar owners’ loans to own businesses hit £138m during Covid as owners risked their own money to keep businesses afloat, revealed private equity investment firm Growthdeck.

The study shows that 1,730 UK pubs and bar companies have “run so short” of cash and other finance that their directors have had to make loans to them from their own personal resources. Many of those loans are for in excess of £200,000.

Pubs and bars reportedly found it increasingly difficult to borrow over the last decade, even those operating at a profit, as high street banks tightened their lending criteria for businesses they deem to be “high-risk borrowers” and limited their lending to SMEs.

Growthdeck said that given the surplus of lower cost leisure space available, there is scope for pubs and bars to see a profitable rebound, provided they have access to the funds necessary to enable them to grow.

The increase in domestic tourism, which saw a 35% jump in number of staycations, has been a boom for the UK hospitality sector. Sales in pubs and bars in August were 35% higher than the same month in 2020 and up by 5% compared to August 2019.

Steve Talbot, investment director at Growthdeck, said: “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.”

He added: “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.

“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.”