Club Finance – Receiving value for money

Daniel Green, Green Finance Group Founder and Director, recently shared the following insights into securing finance for community clubs, in Club Insight Magazine (Issue 1, 2016):


Providing value for money for members and guests is a familiar challenge but how do you go about getting better value for money, particularly when it comes to Club finance? Hospitality finance specialist Daniel Green, shares his thoughts on how to get a better finance deal.

Q1 – What changes have you seen in the club and pub market in the past 12 months?
The market gives a pretty clear reflection of the broader economy and it’s all about location. Clubs located in towns that are supported by the mining industry have taken on significant revenue downfalls whilst the reduced Aussie dollar has seen an increase in international and local tourism positively impacting venues in tourism-driven destinations. The tables have definitely turned.

The regulations around gaming machine licenses have constrained gaming revenue growth for Clubs on a national basis. This is a significant factor when you consider that just under 50% of total revenue nationally for Clubs is derived from gaming. In addition to the regulatory changes, the industry is facing increased competition from other licensed venues that offer gaming facilities, particularly hotels, pubs and casinos, as well as online gambling and smartphone apps.

Clubs are definitely working harder, and smarter, to get patrons through the doors. Special events, improved food quality and variety, beverage deals and a commitment to improved venue presentation are all on the agenda.

Increased investment in fit-out and presentation focusing on relaxation and entertainment is a priority for venues looking to the future and lenders do have an appetite for it, you just need to know which lenders.


Q2 – We are currently seeing record low interest rates but just how important is interest rate when looking for a loan?
Comparing and selecting your loan or lender based on advertised interest rates alone could actually end up blowing out Club costs in the long run.

Making sure your complete finance package is structured correctly is paramount. Loan structure equals increased freedom and control and that’s critical for Club success. Loan structure will differ for every business but ideally will take into consideration your cashflow needs both now and in the future. The right structure will give you access to funding for capital as your business grows and possibly allow you to change banks more easily should more competitive options become available over time.

Keep in mind that interest rate discounts can often be negotiated and will depend on various factors such as how much the lender wants your particular business, the strength of your business case and most critically, your finance broker or bank manager’s ability to professionally package your application and negotiate on your behalf.

Q3 – How long does loan approval typically take and is there any way to speed it up?
Loan approval can take anywhere from three days to fourteen days and will largely depend on the size and complexity of the transaction.  

For larger transactions most banks will require a valuation of the Club facilities and this process can take up to two weeks, depending on how easy it is for a valuer to gain access to the Club to complete an inspection.

A good finance professional will be able to tell you straight up which bank is going to meet your needs and give you a realistic timeframe from the outset. They’ll also be able to head off any potential issues before you go to application, ensuring a more streamlined process.

Working with a finance professional with a proven track record in Club transactions is key. Someone who has a reputation for quality credit submissions and consistently high loan volumes can provide benefits in the form of fast-tracked response times and direct access to bank decision makers. This can make all the difference if you are on a tight timeframe or when needing a tailored solution for a deal that may not ‘tick all of the boxes’.


Q4 – What is your top tip for getting a better deal on your finance?
Get an experienced negotiator on your side. You need someone who can demonstrate excellent bank policy and product knowledge across a range of finance providers. Someone who can tell you which bank or lender wants your business and how to best leverage your position.

And, as the saying goes, don’t put all your eggs in the one basket! Lenders have varying levels of expertise in different areas. For example, the major banks have a tendency to avoid funding assets such as fit-out and poker machines due to the comparatively low value of these items and their subsequent funding.

On the flipside, sometimes you just need to know who or how to ask. Getting a better deal with your own bank may come down to the way in which your loan application is packaged or your finance professional’s capacity to negotiate on terms and conditions.


Q5 – What are your thoughts on what the future holds for the club and pub market over the next 12 months? 
Competition is high and it’s increasing, that’s undeniable. We are expecting to see more consolidation as smaller niche operators merge with larger players.

Patrons still want to spend time socialising with their friends and family in quality venues. Clubs that have an in-depth understanding of their members’ and guests’ needs and can adapt their service offering and standard of facilities to suit will prosper.

For more information on finance options specific to your club or hospitality business give us a call  on 07 3899 2866 and we’ll show you just how much you can save.