Here’s a list of information which your lender will find helpful in reviewing your initial billboard loan request. I’ve listed things in order of importance to the lender.
1. Monthly company balance sheet and income statement for the last two years. I find monthly statements helpful because many billboard companies are seasonal. I usually underwrite the loan based on the trailing twelve month’s financials to adjust for seasonality. If you are acquiring a billboard company I will want to see financials for both your company and the company you are acquiring.
2. Company income tax return for the past three years.
3. Billboard inventory spreadsheet summarizing billboard locations, type (e.g. 14 by 48, 12 by 24, 8 sheet), tenant, tenant revenues, lease term, lease cost, landlord and lease expiry. This allows me to make a quick assessment about how expensive your leases are and whether you are generating the revenues you should. As a rule of thumb I expect lease expense to be no more than 20% of revenues. I also expect your billboards to generate approximately $1,500/month per face near a freeway and $1000/face if they are not. These numbers will be higher in a big city. I own a billboard in a big city which generates $4,000/month per face. 8 sheets generate much lower rent.
4. Personal financial statement for you.
5. 1-2 paragraphs about how much money is wanted and for what.
6. Projections for the next year. Banks love to see 5-7 year projections. I focus on projections for the next year because if I know the next year I can pretty accurately forecast what will happen in the following year. Most billboard companies show a large one time increase in revenue following the construction of new boards or an acquisition with small revenue increased thereafter.
7. Information on collateral values together with the source. An industry rule of thumb is that your signs are worth 4-6 times annualized gross revenues. You can also point to comparable sales for signs listed at signvalue.com www.signvalue.com or www.outdoorbillboard.com. Your lender will want you to cite an objective third party source for value.
