Lower monthly repayments and a relationship with an organisation that makes the effort to understand her business were two of the main reasons pub company boss Lesley Humphrys opted for a FOLK2FOLK loan last year.
Humphrys runs the Toastie Taverns chain of 24 public houses in the North-west of England and she has successfully refinanced a £705,000 loan on 13 of her properties with FOLK2FOLK after taking advice from her broker in August 2017.
“We had been with RateSetter for about 12 months, but we were facing extremely hefty monthly payments as we were repaying both capital and interest,” Humphrys explains. “This left us with no money to reinvest into the business.”
The FOLK2FOLK loan is interest-only, which means that Toastie Taverns has managed to free up a considerable amount of spare cash. “This leaves me free to invest back into my estate,” Humphrys says. “The pubs we have acquired are tired: I would say 50% of the houses need refurbishment.”
One of the reasons Humphrys has turned to peer-to-peer lending platforms for funding is that bank finance has all but dried up. “If you take the pub industry in general, it doesn’t have a very good reputation and pubs have been closing at a steady rate ever since the smoking ban I suppose. Because it is seen as a declining market, nobody really wants to lend.
“I have tried looking for bank finance, but all the red tape around it is extremely difficult to deal with, even if someone is willing to lend.”
One of the key advantages of working with FOLK2FOLK was being able to have meetings in person, she adds. “It is vitally important that the lending platform understands what we are doing: and in this way FOLK2FOLK was happy with our business plan, numbers and performance.
“We know that you can’t just serve a pint of lager and expect that to be it. The customer is looking for quality, consistency and they want to come in and a have a good time in your establishment.”
Humphrys says her broker had arranged a handful of deals with FOLK2FOLK prior to recommending the platform to Toastie Taverns. “He said they would come out and meet me face-to-face and that was exactly what I wanted. I wanted to create a partnership rather than just have money lent to me by someone who goes off and doesn’t see me again.
“Once upon a time, you used to have that with the banks: you’d go to lunch and you’d talk about the business and its needs. But since the financial crisis, that approach has disappeared. To me, though, it looks like the P2P lenders are going back to the old banking relationships.”
Humphrys also appreciates FOLK2FOLK’s ethos of helping individual lenders put money back into their local communities. “We run community boozers, so we have that sort of ideology anyway,” she explains. “The great thing for us is that FOLK2FOLK Lenders have lent us the money over three years and that is set in stone. That means we can get on and grow our business, and make sure our turnover is growing.
“One of the biggest challenges in the industry is that pubs need to evolve because the customer base is changing. But having that three-year timeframe gives us the certainty to be able to meet the challenges we are currently facing.”