Ray Moll, Guild Commercial Finance

Anyone currently applying for Childcare finance could be mistaken into thinking it might be easier to walk on water. In my travels, I keep bumping into people with the same storey; ...”the last time we applied for finance, we only had to... and it was approved”.... Most likely was but the world has changed significantly. The banks are lending less and conditions are stricter.

Here are a few of my thoughts on finance; for both buyers & sellers:

Sellers

There may be a million reasons why you’re selling but arguably you want to sell quickly and for the highest price. Simple enough, yet time after time, I encounter ‘road blocks’.

For example:

• Vendors who haven’t completed their current year’s financials. ALL lenders want up-to-date financials. Meaning, if you go to market after 01/01/2010, the lender will insist on seeing 30/06/2009 P&L and Balance Sheet. If you to market after March 2010, you are likely to be asked to provide “interim” financials.

• Unusual activity or trends. For example; a centre reports a loss of say $75,000.00 in 2008 followed by a profit of $2,000.00 in 2009. That’s a resounding turn around. Every lender in the world will want an explanation for the reversal of fortunes.
  
  I’ll share more examples in the next article. For now, the message to sellers is simple –“get fit for sale”.

Buyers

Childcare finance is a challenge in current market. In addition to the usual aspects of security and serviceability, the lenders are closely scrutinising:

• Management experience. Most lenders are looking at 12 months experience running a childcare centre. If you don’t have this experience, you must be able to mitigate the lack of it. Employing a management company may be the answer. Otherwise you must be able to demonstrate that you have the skills to do this.

• Most lenders want to see all the information “up-front”. Particularly, when dealing with loans under $500,000.
  
  o Have your tax returns for the last 2 years ready.
  o Prepare your cash flows.
  o Prepare your business plan.

Just like Sellers, the Buyer has to get “fit for purchase”.

In summary, whether new to industry or experienced; if it’s been a few years since you last approached a lender for Childcare finance, I recommend you approach & obtain the assistance of an industry specialist to help you negotiate this new landscape.

TO ENQUIRE INTO CHILDCARE FINANCE, CLICK ON THIS LINK TO COMPLETE AN ONLINE ENQUIRY FORM AND RAY WILL GET BACK TO YOU IMMEDIATELY

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