Billboard Lending

Sources for Billboard Loans

There are three sources for billboard loans: niche finance companies, sign vendors and banks.  I will discuss the pros and cons of each source.

Niche finance companies such as Billboard Loans or Stark Capital specialize in one or two industries including billboards.   Pros: (1) Niche lenders know the industry so you won’t have to waste time educating them about why you have a valuable business.  (2) Niche lenders are unregulated so they can be faster and more creative than banks.  I can issue a term sheet in a day, a commitment in a week and can close a loan in two weeks when I have to.  (3) Niche lenders are committed to the billboard business and won’t abandon the sector in a recession.  Cons: Niche lenders are more expensive than banks.  Your financing cost will be 10-15% with a niche lender rather than 5-8% with a bank because niche lenders don’t have access to cheap federally insured deposits.

Sign ManufacturersYesco finances signs.  Daktronics has a vendor finance relationship with PNE.  Pros: (1) Vendors may be willing to finance 100% of a sign purchase.  (2) Vendors may be cheaper than niche finance companies because they are making money on the sign sale.  Cons: (1) Vendors only finance their own signs. (2) Vendor leases will have a large prepayment penalty.

Banks – I have seen an increased willingness of banks to make outdoor loans.  I have had three outdoor clients refinance my debt with bank debt over the past year.  This is a sign that the lending market is coming back after a credit crunch from 2009-2011.  Pros: Cheap rates (5-8% interest rate) because banks can fund loans with cheap deposits.  Cons: (1) Lack of knowledge of the industry.  You will need to spend lots of time educating your banker on why your company is a good risk even though it has few tangible assets and an annual net loss.  (2) Fickle credit appetite – I saw banks abandon both the billboard and radio loan markets during after 9/11 and again during the 2009-2011 recession.  I have several borrowers who are staying with me even though they are paying a higher rate than they can get at a bank because they know I will not bail on their industry during a recession.

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