DESPITE uncertainty in the press over the long-term future for post offices, banks have tremendous confidence in the sector.
According to RCC Business Mortgages Managing Director Patrick Ryan, banks are more than willing to lend money to prospective purchasers of post office business.
He said: "We have no difficulty in securing funding for post office lending. Generally speaking, banks such as Girobank and The Co-operative Bank, are willing to lend up to 75-80% of the funding required at very competitive rates from base."
Mr Ryan said banks liked the fact that post offices provided a regular income for owners, which helped them to repay debt. They also appreciated the fact that purchasers tended to be people on their second careers, who were very ordered in their approach to the business.
"Very few post office businesses go bust, which is another factor boosting bank's confidence in the sector," he said. "In my view, the doom and gloom which dogged the industry earlier in the year was over-done. Of course, the market is in a period of great change, but we believe this will result in a new hybrid post office-part bank and part community centre - with the opportunity for decent productivity initiatives to enable the commercially aware to run successful businesses."
Mrs Paula Brown, Regional Commercial Manager of The Co-operative Bank, said there had been a "lot of scare mongering" earlier in the year about the effects of benefits being paid directly into people's banks rather than over the counter. As a result of such concerns, The Co-operative Bank commissioned some research into the future prospects for the sector.
"Our view is that post offices will handle other transactions which should more than make up for any potential loss of benefit payments," she said. "We expect to see an improvement in the quality and the variety of services offered in the future, which will be more banking oriented. We're already seeing the more enterprising post office owners promoting to their customers the post office's ability to cash cheques and accept deposits."
Mrs Brown said The Co-operative Bank was keen to lend money to applicants in the sector, having launched three years ago a special scheme tailored to the market. The bank is even willing to offer interest-only repayments to post office purchasers in their first year of operation and a 0. 5% arrangement fee as opposed to the usual 1%.
"This scheme allows us to lend a higher proportion of the funds needed than we would be prepared to lend to other retail businesses because of the security of the post office income. In fact, because we see it as a lower risk business, we will look at up to 75% lending, which is quite high gearing," she said.
Mrs Brown confirmed that a high proportion of applicants were embarking on their second career, having taken voluntary redundancy or early retirement in order to start their own business. "Normally, people buying these businesses would have to have a reasonable amount of cash to invest in them - through selling their home, redundancy payments or savings. As a result, this is generally a market for the older person."
Mark Sheehan, National Retail Director of leading agents, surveyors and valuers, Christie & Co, said that post offices not only offered guaranteed income, but also guaranteed customers. "Banks are not stupid and if they are supporting post offices, that's a pretty good barometer for the sector. Banks have not suffered in this sector as they have in other small business sectors," he said. "We certainly believe there is long-term confidence in the market and plenty of opportunity for potential purchasers. We have taken on a lot of instructions in the last year, from small rural offices to large, commercial, city-centre businesses, many of which are available at realistic prices." As a result, it is an excellent time to buy your own post office and benefit from the new opportunities, which will be changing the face of the post of office sector "
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