Michael A Kahn, October 2, 2010 (original document)


FINANCING GOLF COURSES IN 2015. What you need to know.

Originally written in 2010: Golf course financing has changed dramatically since the financial meltdown. As of September, 2010, golf courses are very difficult, if not impossible, to finance. Here's a few requirements you need to be certain you can meet before even considering conventional golf course financing.

I am hearing about bank loans for golf courses again (2014). However, you need to be 100% prepared for the process. The outline below is the same as before:

Prepare to Provide your Personal Guarantee

Forget the thought of the bank taking the lion's share of the risk in your golf course. Lenders are saying, more or less, "If you think your golf course is so well qualified for the loan you want, back it up with your personal guarantee!"

Loan to Value (LTV) - Now (still) down to 50% to 65%

The days of the 90% loan to value are history. Quotes I hear today are at tops, 65% ($1.3 million on a $2 million purchase or appraised golf course). Many banks and institutions will not even speak to golf course borrowers.

Your Appraisal must be Recent (less than a year old!). Same in 2014

In 2010 an appraisal older than 12-months is out of date, so you can expect to be required to provide an appraisal update to virtually the date of your loan application. I have not seen a lender accept a five-year-old appraisal in 2010. A full appraisal can cost up to $10,000. An update usually less than $5,000. Get quotes.

Debt Service Ratio (DSR) - Now up to 1.35 or more. That may have slackened a little in 2014

Bank of America, Wachovia, Textron Financial and others used to approve loans with a DSR threshold of 1.2 (meaning if the annual debt payment is $100,000, minimum net operating income (NOI) could not be less than $120,000. Lenders are eyeing 1.35 or even higher these days.

Interest Rates and Amortization

With home loans down to around 4%, golf course loans are still being quoted from 6% to as high as 9% - or even higher (2014 - likely similar quotes). Balloons are set as quick as 3-years, but I'm hearing about 5 to 7 year quotes.

Expect to Pay Underwriting Fees and Points

Underwriting fees from $2,500 to $5,000 or more. Don't expect mortgage brokers to bust their butts on your behalf without at least some up-front fees, because golf course loans are tough to achieve. Golf course mortgage brokers have to work very diligently to find and deliver golf course loans.

Have Your Lender's Requirements Ready (See 31-item list below)

Maybe you've read my article on this site (link) outlining why golf course loan applications fail.

You must have all the information and documentation the lender wants when you apply. Chasing for information after you've made the loan request already indicates to a lender that your are not a prepared borrower.

One item lenders want is the trailing 36-months of revenue and expenses.

Call me: 941-739-3990, or write: mike@golfmak.com

I receive inquiries for golf course financing almost every day. Sorry to say, most golf course loan applications have no chance of obtaining conventional financing. I can give you my advice based entirely on my experience as to what I believe will be your chances of obtaining a successful golf course loan.

There may be other sources of financing including JV partners, SBA type loans, and even private money.



To process a loan the fastest way possible, 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 12.
  14. A detailed history of rounds played
  15. A membership list
  16. A recent market analysis
  17. A complete equipment inventory (serial numbers of large machinery)
  18. A complete merchandise for resale inventory
  19. Copies of insurance policies, tax returns
  20. Copies of all permits and licenses
  21. List of all debts
  22. Loans and leases
  23. Environmental surveys
  24. Source of irrigation water, consumption rates, and up-to-date permits
  25. Proof of compliance for storing items like fuel and chemicals, etc.
  26. Engineers structural report on all buildings
  27. Termite inspection report
  28. Agronomy report on the golf course
  29. An up-to-date property survey
  30. A business plan going forward
  31. A summary of key personnel -including salaries, job descriptions

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