Are you a forecourt operator looking for bank funding? Here’s what you need to know

Recently, we have seen a positive trend with lenders looking to support operators in the forecourt sector following a period of uncertainty. Whether you’re considering buying your first site or expanding your group, here are a few things to consider when looking at funding options for the acquisition.

The key to opening the funding door

We are seeing positive movements in the funding space in this sector. Where, historically, lenders had been pessimistic about the future, with regard to the changes in Government policies and other external factors, some lenders have recently changed their attitude towards the sector. To give you the best chance of achieving funding, here are some things to consider.

Experience – While previous experience in the forecourt sector is important, evidencing relatable experience is arguably more important. It is all about giving lenders the confidence that you are the right buyer for the site.

Business plans and financials – Previously, we had seen lenders providing a term up to the 2035 Zero Emission Vehicle Mandate, which in turn impacted how much they could lend due to affordability challenges. We are now seeing lots of lenders change their policies.

It felt like a very strange policy at the time, considering that a lot of experts expect ICE (internal combustion engines) to remain on UK roads for at least the next 20-30 years. Subsequently, policies have changed to allow funding past the 2035 mandate which reduces the annual debt servicing costs. It is important to keep one eye on the future with lenders wanting to know what the possibilities are for the site to keep up with the times.

Having a business plan and forecast that incorporate any amendments planned for the site is important. This needs to include a budget for any capital expenditure planned and how this is going to be funded.

Nearly every lender in the market has a requirement to understand the environmental impact of the businesses they are funding. Preparing for this is important and where possible an environmental survey should be completed in preparation for discussions with lenders.

Diversification – The forecourt of 2025 looks very different to the forecourt of 2005. This is driven by operators looking to mitigate the move away from ICE vehicles by adding EV charging facilities, as well as other retail elements to the business including fast food, and in some instances, gaming services! These are very much like miniature services to account for the longer stay required for EV charging.

The benefit of these additional services is known as retail consumer cross-pollination: where a consumer visits a store for one thing and ends up buying other products that they did not intend on buying.

Giving lenders comfort that the site has scope to add these diversifications, if not already implemented, is important, however long term that vision may be. 

Deposit and funding – We have seen loan to values increasing, with the market offering up to 70% loan to values against the market value of the business for the right site and operator. In some instances, where possible, we have been able to leverage existing assets and other funding solutions meaning our clients have not had to introduce any funds into an acquisition – this is something that hasn’t always been possible in this sector.

At Christie Finance, we’ve helped many buyers secure the bank funding they need to achieve their business goals in the forecourt sector. We’ll guide you through the full journey, from preparing your application to negotiating terms with lenders, so you can focus on building a successful business.

To speak about finance for petrol stations, contact Ashley Clements: +44 7714 138 984 or Ashley.Clements@christiefinance.com.