So with all this positivity - banks must be stumbling over each other to lend to this sector?
In fact the comparisons between a bank and a 5 year old can be quite striking, as both can change their appetite over night. One minute they like lending in the childcare sector the next they won’t increase lending facilities at all.
Therefore, despite positive fundamentals in the childcare sector, obtaining finance is not always child’s play even with lenders having openly stated they have an increased appetite to lend.
Negotiating with a bank can be a minefield and thats where we come in. Within the childcare sector there is a lot of regulations, grant income, funding and terminology that your local bank manager may not be accustom with. Our process for securing finance ensures these issues are addressed and understood by the lenders we approach.
There is a detailed level of understanding required by a bank manager to fully understand a day care nursery proposition which can sometimes create barriers to obtaining finance, this is where the experience Christie Finance have in this sector can put you in a strong position.
There are key areas to consider when seeking this finance, including:
Whether you are a starting up, buying or expanding, these key areas will form the lenders decisions to support any application.
It all seems very obvious but presenting this in the right format and structure to a bank is vitally important.
If you assume a loan from a bank to be like its own child this is a good starting point. As with any new parent looking for a nursery they will expect their child to be looked after and supported to develop, much like a bank will expect the money (child) back with interest (development).
Expanding on the analogy of treating bank like a new parent can be a good approach to any application. Bank underwriters looking at a proposal will take a desktop approach reviewing Ofsted Reports, strength of management, location of the business, as well as the profitability of the business or forecasts.
Another common scenario is for an existing operator to look to expand their business by purchasing additional sites or extending their current site. This can be achieved by borrowing against their existing business, from a finance point this could be viewed as a new start up all be it the lender will have the benefit of a successful track record therefore making the finance easier to source but open to competitive market terms.
On the whole lenders will look favourably at the childcare sector. Operators that can demonstrate their experience and success can benefit from this increased appetite to lend to achieve good rates and terms.
Christie Finance has the support of the Christie & Co Network, which offers a vast amount of experience and specialist knowledge in the childcare sector, this will help support your plans and achieve your ambitions.