Surles: Financing a Campground Project

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October 7, 2011 by   - () Leave a Comment

Bud Surles

Bud Surles’ Consulting Group provides planning, design, and development services for visionary landowners and developers desiring first class utilization of their land. With over 30 years experience, Surles has won national recognition for his management, design, development and leadership accomplishments and offers knowledge and expertise in developing resorts across the nation. See for additional information. For information concerning Bud Surles’ Consulting Group contact Amie at or call (832) 494-7862.

You may have noticed by now that money is hard to come by. It has never been real easy to obtain, but in the last two years, it has become the greatest challenge of expanding, renovating, and building new projects. There is probably no issue that clients bring up with me that is more frustrating than this one and I would like to give some very broad guidelines for financing a development project.

The first step in any project is to clearly know what you want. And while this may seem self-serving, without a master plan, it will be impossible to attract investment capital. So step one in the process is to have a good master plan, complete with a competitive market analysis and business plan. Having the homework done ahead makes the road to financing far smoother.

The second is to have a clear plan for how you want to raise the capital. Personal financing is always the surest way, but is not always the best from an investment and tax standpoint. Private resources from friends and relatives are solid, but a good way to lose friends and family. Commercial lending has almost dried up, but when available is always the best. A long-standing personal relationship with a commercial lender pays many dividends. Venture capital is not an easy source and the costs are higher than traditional sources, but if you are sure of a project, it has possibilities. Joint venture arrangements have possibilities and can be rewarding, but always remember that you give up a portion of your dream to go down this road. If these sources are not available, starting slowly with personal resources and letting the cash flow develop the future is always an option for the patient.

Projects which have a history are far better candidates for financing in this market than “Greenfield” (new development). Lenders like to see what the project has done in the past to determine if they want to join with you in the future. If a project is an expansion or enhancement of what is already successful – all the better.

If you want someone to trust in your dream, they will want to know how much you trust in your own dream. The more equity that you have in a project, the more interested a lender will become. Land that is free and clear has a much better chance of development dollars than encumbered land. A large percentage of personal capital (skin in the game) gives confidence to a lender that you believe in what you are trying to sell them on. And if cash assets are still lacking, other personal assets pledged to a project are always beneficial.

Seldom in this environment will a loan be processed without personal loan guarantees. You must be willing to pledge your worth to the project to get lenders to even talk with you on your ideas and dreams. And to the extent possible, other guarantors will help sweeten the pot for potential lenders.

Of course, your personal credit history is of the utmost importance. If you have a good history of servicing your financial obligations, then you will have a favorable rating with the lending community. A FICO score of 750 or better is very advantageous when looking at commercial funding sources. Lower than that in this market is problematic. Scores below 690 become almost impossible to merit consideration.

What is happening in the industry, both nationally and locally is also a consideration. If the market is struggling in your area, no matter how unique and different your ideas are, commercial lenders will look first and foremost to the climate in which they are investing. Be prepared. Have a well thought out competitive market analysis and marketing strategy available before contacting potential investors.

Finally, your experience in operating a project will be absolutely necessary for lenders. In some cases they will bet on your proven track record. Short of having that track record, a commitment to an experienced team is essential. The better you know the industry, the more successful experience you have in the industry, the more likely you will be able to interest investment capital.

These are just a few of the essential thoughts you must consider before financing a project. Consultants have lists of people who have track records in financing, but without a thoughtful analysis of the above issues, it is unlikely they can help you find investors.

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