Billboard Loan Sources

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

Private finance companies consist of specialized private lenders like WP Media Lending (www.wpmedialending.com) or Stark Capital (www.www.starkcapitalsolutions.com.  Private Lender advantages: These lenders know the business (I own signs in addition to lending) so you won't face stupid questions.  They also have a track record of not abandoning the business during a recession.  And they are small and fast and nimble.  Private Lender disadvantages: Funding is a matter of weeks, not months.  DisadvantagesPrivate lender funding is dependent on healthy equity and debt markets and may be scarce when financial markets tighten (e.g. 2009-2012).  Also private lenders are more expensive than banks (10-15% interest rate versus 5-8% for banks).

Sign Manufacturers.  Yesco (www.yesco.com) finances signs.  Daktronics (www.daktronics.com) have a vendor finance relationship with PNE.  Vendor financing advantages: The sign manufacturers may be willing to do 100% financing and they can be cheaper than a specialty lender (the sign companies make money both on the loan and on selling the sign).  Vendor financing disadvantages: Large prepayment penalties (especially with lease finacing).  An unwillingness to finance another vendors sign.

Banks - Small banks are sometimes willing to make outdoor loans.  I have two outdoor clients who are in the process of refinancing their loans with bank financing.  Bank loan advantages: Cheap costs (5-8% interest rate) because they fund loans with low cost deposits.  Bank loan disadvantages: Fickle underwriting.  Banks tend to abandon industries they are not familiar with during a recession.  I saw banks abandon the billboard market during 9/11 and again during the 2009-2011 recession.  In addition banks don't understand the business.  You will have to spend lots of time educating your lender.  Finally, banks are bureaucratic and a lengthy credit approval and documentation process.  A new loan will take months, not weeks.