Financing a New Golf Course

A LENDERS EXPECTATIONS FOR A GOLF COURSE LOAN  

Golf course buyers too often look for unrealistic loans. It's because they're not bringing enough money to the table - they are trying to buy a golf course they cannot afford.  A golf course buyer should have a minimum of 35% cash to put down on a golf course and still have plenty of operating capital on hand after the close.

Example Below

 Information about the subject property you may need to provide.

Too process a loan be prepared to provide all the information the lender needs with the loan application. Every item must be verifiable, so be sure your source of data and information can be easily referenced. Be aware that lenders may ask for items not listed below.

  1. Personal financial statement

  2. Borrower's personal background, or resume

  3. A property description including exact location, when built, architect, yardage, cart paths, acreage, square footage of buildings, etc.

  4. A list of all fees, dues, menu prices, etc.

  5. Marketing materials, brochures, menu, score card

  6. A property history - known previous owners, historical highlights

  7. A recent property appraisal 

  8. A detailed 3-year cash flow history

  9. List of accounts payable

  10. A list of accounts receivable

  11. Financial statement with balance sheet

  12. Bank statements up to three recent years

  13. Statement of use of funds

  14. An up-to-date property survey

  15. A detailed history of rounds played

  16. A membership list

  17. A recent market analysis

  18. A complete equipment inventory (serial numbers of large machinery)

  19. A complete merchandise for resale inventory

  20. Copies of insurance policies, tax returns

  21. Copies of all permits and licenses

  22. List of all debts

  23. Loans and leases

  24. Environmental surveys

  25. Source of irrigation water, consumption rates, and up-to-date permits

  26. Proof of compliance for storing items like fuel and chemicals, etc.

  27. Engineers structural report on all buildings

  28. A summary of key personnel -including salaries, job descriptions

Subject's recent revenue history not enough to carry debt.

In 2021 and the coming year you can expect lenders to shy away from golf course loans if the trailing 36 month cash flows indicate an inability to carry the proposed debt. Golf course loans are considered business loans by bankers. Therefore, even if the property is being purchased for less than appraised value, the lender's decision will only be based on the ability of the 'business' to service the debt.

 Borrower has little or no experience in golf course operations.

A first time golf course buyer may have a problem with a golf course loan application - especially if the LTV is more than 65%. Many experienced golf course lenders want to see their borrowers with a reasonable amount of experience in the golf course business.

"One way around the lack-of-experience issue is to include an experienced golf course person in the executive summary in the business plan. 

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