Franchising firm Belvoir has beefed up its growth strategy with an acquisition-related loan facility running into millions.

The agreement, part of a new deal with HSBC, will allow Belvoir to snap up other franchise firms and also letting agencies which decide to call it a day once the tenants’ fee ban comes in.

Altogether, the package is worth up to £17m, and includes £6.5m refinancing of existing borrowing.

The facility will allow Belvoir to accelerate its growth through acquisition, building on purchases made in recent years including that of Northwood.

Belvoir acquired Northwood two years ago, on June 7, 2016, for a total of £22m – £11.5m paid upfront, and the balance payable as a two-year earn-out, meaning that up to £10.5m could be due very shortly.

Belvoir, which currently has around 300 franchisee offices, recently made an unsuccessful bid to merge with competitor The Property Franchise Company.

Louise George, chief financial officer at Belvoir, said: “When it came to providing the funding to support our immediate and longer-term growth ambitions, HSBC stepped in and offered the necessary facilities that were both competitive and flexible enough to meet our needs.”

“Phil Carr, our relationship director at HSBC, went out of his way to understand our company, our franchising business model, the sector in which we operate and our future plans.”

Roger Pratt, HSBC area director for corporate banking in the east midlands, said: “The lettings industry is going through a period of consolidation with increasing regulations placing pressures on administrative tasks for smaller agencies.

“We’re delighted to welcome Belvoir to HSBC and look forward to supporting the business as it continues to push forward its ambitious acquisition strategy.”

Meanwhile, franchising firm Northwood’s latest accounts show it made a profit of almost £1.3m last year on gross income of £2.8m.

The figures are the first full-year accounts since Northwood was acquired by Belvoir in 2016 and the profit margin at over 40% looks to be a huge improvement since pre-acquisition.

In the accounts for the financial year to the end of last December, director Louise George spells out concerns over legislative changes affecting the lettings industry.

Recent tax changes on interest relief, plus higher Stamp Duty on the purchase of additional homes, have cooled buy-to-let landlord activity, she said.

The forthcoming ban on tenant fees “has led to uncertainty for both existing and potential new franchise owners”.

However, Northwood will encourage its franchisees to engage in upsale possibilities in the financial services sector, including the commission on insurances, conveyancing and mortgages.

It will also encourage local acquisitions to expand letting portfolios and proactively recruit new franchisees.