Garden centre finance: a guide to bank funding

The garden centre sector continues to grow in popularity among operators and investors alike, offering multi-faceted income streams, strong asset value, and a great opportunity to diversify a commercial portfolio.

If you're thinking about buying your first garden centre, or adding to your existing portfolio, there are several key factors to consider when it comes to funding. Having the right advisors and support network in place can help you secure the finance you need to support your acquisition.

Pros of buying a garden centre

Before discussing funding, let's look at some of the reasons why operators and lenders are increasingly interested in the garden centre sector:

• The right business can offer diverse income streams, allowing operators to capitalise on cross pollination of their customer base. Rental income streams from concessions also help to balance the income throughout the year, reducing seasonality.
• This diversity contributes to a broader customer base, allowing each part of the business to thrive beyond what a standalone entity might achieve
• Strong asset value can support the acquisition from a security perspective, which is attractive to lenders

Understanding these benefits is key to securing garden centre finance and presenting them effectively can make a significant difference when approaching lenders.

What are lenders looking for?

There is a broad range of lenders who support this sector, so it is important to ensure your business plan and the target business present a compelling opportunity.

Proof of concept

While sector experience is beneficial, transferable business experience can also be valuable. More importantly, lenders want to see that the garden centre for sale has longevity and a proven track record. This can be demonstrated through historic financials and management information.

Business plan and forecasts

Lenders will want to understand how you plan to operate the business. Outline your approach to inherited staff, operational changes, and the financial impact of those changes. Be realistic, as overly ambitious plans may raise concerns.

Finances and funding structure

Typically, a minimum deposit is around 30%, but this can vary. Lenders often refer to ‘skin in the game’, meaning a cash deposit is usually required, especially for first-time buyers. However, there are alternative funding options, such as unsecured finance or leveraging existing assets, and we have worked on multiple transactions where the purchase is structured in different ways.

A specialist commercial finance broker can conduct a full review of your position and present all available options if you’re looking to buy a garden centre in the UK.

The asset

Understanding the asset from a security perspective is crucial. Lenders assess both the trading business and the property itself. Having a valuation carried out before approaching lenders can help pre-empt questions and strengthen your application. While not essential, it can be a useful step in the process.

Summary

Buying a garden centre can be a daunting prospect for first-time buyers. With the right support network, including a specialist commercial funding broker such as Christie Finance, alongside a commercial property agent like Christie & Co, a solicitor and an accountant, you can give yourself the best chance of securing the finance you need to complete your purchase.

For further advice on finance options for garden centres, contact Ashley Clements: +44 7714 138 984 or Ashley.Clements@christiefinance.com.