Golf Club Finance and Commercial Mortgages: How to Fund Your Course and Clubhouse
Running a golf club is about a lot more than fairways and greens. You are managing a complex business with big capital needs, seasonal income and rising expectations from members and visitors.
At some point you may need to raise finance without putting your cash flow under strain.
That is where commercial mortgages and tailored golf club finance come in.
For qualifying borrowers, this can help you to buy a golf course, refinance existing borrowing, fund a clubhouse refurbishment or even develop new facilities, while keeping payments manageable and aligned with your business plans.
What commercial mortgages for golf courses actually are
A commercial mortgage for a golf course is usually arranged under what lenders call a leisure industry mortgage.
In simple terms, this is a loan secured on your golf property that is designed for businesses operating in leisure and hospitality.
You can typically use this type of finance to:
- Buy an existing golf course or golf complex
- Refinance an existing mortgage to improve terms or release equity
- Raise capital for investment elsewhere in the club
- Support partner buyouts or changes in ownership structure
The mortgage is secured on the land and buildings, just as with a standard commercial property loan.
Because golf courses are specialist assets, lenders often treat them differently to offices or shops. As a result, working alongside a broker is recommended.
What can be financed at a golf club
A common misconception is that commercial mortgages only cover the purchase price of the course and clubhouse.
In reality, lenders and other funders can support a wide range of projects. For example, finance can be used for:
- Refurbishment of the clubhouse, locker rooms, bar and catering areas
- Course improvements such as new tees, bunkers, drainage or irrigation systems
- Machinery and equipment including mowers, tractors, utility vehicles and buggies
- Additional leisure facilities such as practice ranges, simulators or fitness areas
- Building or extending function rooms to host weddings and events
- Infrastructure projects such as car parks, paths and lighting
Depending on the situation, this may be best funded through a commercial mortgage, asset finance or development finance.
Find out Your Options
Potential terms you can expect with leisure industry mortgages
Although every lender has their own appetite, there are some common patterns when it comes to golf course mortgages. You will usually see the following features.
Deposit and loan to value
Lenders rarely offer one hundred percent funding on specialist leisure property. You will normally need to put in a deposit from your own resources or from other secured borrowing. In many cases the maximum loan to value is around seventy percent, meaning you need roughly a twenty five percent deposit and to cover fees and taxes on top. The terms are bespoke so best to get individual advice.
Loan term and structure
Terms can be relatively short, for example three to five years, or they can run for as long as twenty five to thirty years, depending on the nature of the project and the lender.
You can often choose between:
- Capital repayment, where you gradually pay down the balance
- Interest only, where you keep monthly payments lower and plan to repay or refinance at a later point
Interest rates and pricing
The interest rate is usually quoted as a margin above the Bank of England base rate or another reference rate.
The exact margin depends on the perceived risk of the business, the stability of income and the strength of your track record.
Well established clubs with steady trading and strong management will usually secure better pricing than highly leveraged start ups.
Age and eligibility
Most lenders apply minimum and maximum age limits for borrowers. It is common to see a minimum age in the early twenties and a maximum age at the end of the term in the seventies or early eighties.
Where you sit in that range can influence the term they are willing to offer, which in turn affects affordability. Each case is dependant on the circumstances and if there is separate management in place, age of the directors may not be a factor at all.
Development finance for new or improved golf facilities
If you are planning major works, such as building an entirely new course, extending the layout or constructing a new clubhouse, a standard commercial mortgage may not be the best tool on its own. Development finance is often more suitable.
Development funding can help with:
- Buying land for a new course or extension
- Course construction, drainage and landscaping
- Architect and design fees
- Building or refurbishing a clubhouse, pro shop or leisure complex
- Associated infrastructure, from access roads to parking and services
This type of finance is usually drawn down in stages as the project progresses, and interest may be rolled up until completion. Traditional high street banks can be cautious about these schemes, especially where there is planning risk or where income will take time to build.
Other finance options for golf clubs
Alongside commercial mortgages and development funding, golf clubs often use other types of finance to spread the cost of investment. Common examples include:
Asset finance and leasing
Instead of buying machinery and vehicles outright, you can spread the cost over a fixed term, preserving your working capital. Hire purchase and leasing arrangements can cover everything from fairway mowers to irrigation systems and even indoor simulators.
Membership and subscription finance
Some clubs use specialist providers to allow members to spread annual fees while the club receives most of the money up front. Structured correctly, this can smooth your cash flow and improve retention.
Refinancing existing borrowing
If your club has accumulated a mix of loans, overdrafts and equipment agreements, it may be possible to restructure this into a clearer, more efficient package.
Conclusion
Commercial mortgages through leisure industry lenders can help you purchase or refinance the course.
Development finance can unlock major projects such as new holes or a new clubhouse.
Asset finance and other facilities can keep your course equipment and infrastructure up to date without draining your cash reserves.
The key is choosing the right mix of funding, on terms that your business can comfortably support.
If you are considering finance for a golf course, refinancing your existing club or planning a major development, please get in touch.
