Stop the Press

It’s just on three months since I had a whinge about banks and their retreating from small business lending.

It remains well placed.  I can’t say that there is evidence of things getting better, as I now wait for a lending stream on a customer’s application to crystallise after what has been a four-month journey.

Remember those school days when playing chess.  You’d keep your finger on top of the piece you were moving for an interminable time, checking every other piece on the board to make sure none of them was going to gazump you, much to the chagrin of your opponent who would probably have a similar approach anyway.

I’m sure the worst of those guys went on to be credit managers in the banks that are now triple checking every angle – and even one more time.

And then I suggested to an accountant who had done a very impressive set of books for his and my client, that if we agreed the addbacks, could he include them in his Profit and Loss presentation as his letter head could be seen as a more conservative presentation than that of a right brain thinking business broker.

I was told to move over.   His mail was that vendor’s accountants are seen to be part of the problem, even suggesting that the paperwork surrounding a BAS statement and prepared by the aforesaid accountant was not considered kosher until supported by the evidence in his client’s tax portal printout.

But if you hadn’t noticed, there is an equalizer afoot.

Uncle Kenny.  No, not the Shane Jacobson’s alter ego, Kenny Smyth.

Kenneth Hayne – the man running the Royal Banking Commission.  

And that Rowena Orr - the ‘counsel assisting, peeling back the layers of the onion until all is exposed, ‘like a dog with a bone’, just to mix my metaphors,

And Michael Hodge, the one with a softer presentation, and the master of the pregnant pause, allowing those being questioned the opportunity to internally review the words they may have wished they hadn’t said.

We now know that a number of financial institutions have been taking the pennies off their dead customers’ eyes - literally!

And yet these are the same organisations – including some of the four pillars - ‘in whom we trust’.

Now that’s a trust being proven to be misplaced.

I remember a discussion with a chief auditor in my bank of career choice for twenty or so years.  The topic of trust came up.

His mantra was ‘Trust in God and……………….watch the rest!’

So, how does all that help the challenges we face when a motel is up for sale?  

If you’re selling, make sure that all the numbers add up in all the different forums – booking systems, accountant’s financials, tax portals (your accountant can print these off for you).   Look for a perfect match.

Check that all the years you believe are on your lease, are supported by the it, and its assignments and variations.   Ultimately this is what you are selling, along with an income that is seen to be repeatable and realistic.   And make sure the ‘chain’ isn’t broken.  All time is accounted for.

(If this is confusing you, I strongly suggest you give your lawyer who assisted you into the motel a call.  He at least should have all the paperwork).
Back to unrealistic.  It’s unrealistic if it’s a 20 plus room motel with no wages showing.  It just lacks credibility, and if you’re doing it, I wish you well, but that won’t be your buyer’s expectations.  He wants a life as well.  When it comes to lending, it won’t meet the bank’s expectations either.

Make sure your depreciation schedules are up to date.  Banks love them. But to buyers make sure those schedules don’t get in the way of how you are buying the property.  Now that’s some gold you should talk about to one of Tourism Brokers well qualified agents.

If you’re buying and borrowing, start by applying for one of those free credit checks advertised on the telly – just to make sure there are no financial skeletons in the closet before you even start the process of applying for lending.

If there are – move them!  Before you apply!

Test the waters with a finance broker.  Test your borrowing power, and from that test your purchasing power.

I’m not sure if your old manager mate Andrew, down at the local branch is the right guy for this.  It’s a particular asset that you are borrowing against.  It’s called a lease most of the time. Something your local branch will have little exposure to.

Tourism Brokers has contact with a number of Accommodation Industry Finance specialists who can give you first class advice.   They importantly know the ‘right’ people in the right banks to be talking to.

So, I can’t resist the line.   You wouldn’t go to a proctologist to get your tonsils out would you?

Such is the specialist finance in the accommodation industry.

And just a carryover since I last wrote.

Vanilla – it remains the best flavor – everywhere!

Reg Partington
Sales Executive: Victoria
Tourism Brokers
August 2018