How can debt restructuring help my hotel business?

One year into the coronavirus pandemic, the European hotel industry still faces a great level of uncertainty. With several government support packages and ways of restructuring, the industry is responding differently in each country to ensure businesses can continue to be viable in the aftermath of COVID-19.

In the UK, employee furlough schemes, business loans and suspensions on evictions have allowed the industry to continue trading and prevent the detrimental effects of lockdowns. However, there are still tough times ahead for the industry and Kate Nicholls, of trade body UKHospitality, says businesses need “enhanced grant support to keep venues alive and a solution to the ongoing rent debt problem that continues to linger over the sector.”

As owners and managers of hotels are left with plummeting occupancy rates, they now need to work out how to pay debt-related obligations and keep their hotel business afloat. Debt restructuring is a strategy that can help to find suitable funding and refinancing options to ease the pressures of trading difficulties, especially during these unprecedented times.

What is debt restructuring?

Debt restructuring is a process that allows businesses experiencing financial difficulties to refinance existing debt obligations. It makes debt more manageable and can provide much needed flexibility to businesses who need it in the short term.

How can debt restructuring help my hotel business?

If you are unable to meet your loan repayments to a commercial lender for your hotel business, you may feel under extreme pressure and your livelihood could well be at risk. A restructuring agreement can help to make your debt more manageable and ensure that once the pandemic passes, your hotel can still run effectively, and you and your employees will still have a job.

There are several ways this can be achieved but negotiating the terms of your debt payments with your lender can help you to secure positive outcomes and maintain your financial relationships.

Debt restructuring experts

Here at Stewart Hindley, we are experts in debt restructuring within the hospitality industry and will work to secure the best possible outcome for your hotel. We will help to guide you through the complete process and act on your behalf to reach a consensual agreement with your commercial lender.

Firstly, we will complete a full review of your business and negotiate with your commercial lender to agree on a recovery strategy for your hotel. We will also introduce new lenders who may be able to refinance your existing debt and achieve a repayment forbearance period whilst the restructuring takes place.

 

Contact Stewart Hindley today

If you’re a hotel owner or manager trying to navigate these challenging times and need experienced support and help with your business finances, please don’t hesitate to get in touch. We can look at your individual circumstances to help you secure the debt restructuring your hotel business needs.

Business Support Finance – COVID-19

Launched in response to the coronavirus outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support UK businesses during this period of disruption. CBILS provides the lender with a Government backed guarantee of 80%, against finance offered under CBILS with the balance of risk being held by the lender.

CBILS is designed to assist with cash flow, initially by way of a Capital Repayment Holiday (Interest only period) of 12 months or a commercial loan over 6 years, with no repayments in the first 12 months followed by a 5-year loan facility on a full repayment basis.

CBILS will only be made available to businesses that were deemed “viable pre Covid 19” and as a consequence a “robust” case must be made for your new Capital Repayment Holiday or loan based on your pre Covid trading information.

It is important to note that if your financial and supporting information isn’t presented correctly to meet the lenders requirements, this could lead to a decline for support, which may impact on your existing loan covenants when considered against your lenders’ “prevailing” debt service criteria which may give your lender cause for concern post Covid 19.

During this period of uncertainty, we at Stewart Hindley & Partners are here to help you and have direct access to all the lenders’ that offer CBILS and who are accredited by the British Business Bank. https://www.british-business-bank.co.uk/. If for any reason your business is not eligible for CBILS then we can provide other routes to finance to support your business.

Given the record levels of demand that banks are incurring for general advice and CBILS applications, we at Stewart Hindley & Partners are able to offer, on your behalf, support through our own FCA relationships with all CBILS accredited lenders.

As a result, we are able to deal with the relevant Business Relationship Manager directly, to ensure a prompt application, with the best possible outcome given your circumstances and thereby take away the uncertainty by securing a decision in-principle within 24 hours.

If you’d like to discuss how we can assist you with your CBILS application or any other funding requirement during these challenging times, then please don’t hesitate to get in touch with us either via completing the contact form or by calling us directly on 01488 684834.