Pub & Hotel Finance in Australia: How It Works, Costs & Deposits
Pub & Hotel Finance
Going concern · Freehold vs leasehold · Gaming · Valuation
Pub loans and hotel loans are assessed on the venue as an operating going concern, not the building alone. This Australian guide answers the key borrower questions on freehold versus leasehold, LVR and deposits, serviceability, valuation, licences, gaming, costs, tax, due diligence, security and lender types.
Quick Answer
Pub loans and hotel loans in Australia are commercial facilities used to buy, build or refinance a licensed venue, assessed against the going concern rather than the building alone. Indicatively, lending may reach about 65% of going-concern value on a freehold gaming venue, nearer 50% without gaming, and up to about 70% on leasehold where the lease is strong enough. Lenders commonly test adjusted EBITDA or EBITDAR at around 1.5x debt-service cover, and a complete file may settle in roughly 4 to 8 weeks. Switchboard Finance broking benchmarks as at July 2026 only; not a quote, approval likelihood or lender promise.
Indicative Switchboard Finance broking benchmarks, reviewed July 2026. Every venue is assessed on its own trade, tenure, gaming, security and lender policy.
| Borrower question | Direct answer |
|---|---|
| What is financed? | The licensed venue as a going concern: property where owned, repeatable trade earnings, tenure, licences and gaming. |
| How much may a lender advance? | Indicatively up to about 65% for a gaming freehold, nearer 50% without gaming, and up to about 70% for leasehold, subject to valuation and policy. |
| What equity may the buyer need? | Roughly 35%, 50% or 30% respectively, plus duty, valuation, legal, accounting and regulatory costs. |
| How is serviceability tested? | Adjusted EBITDA or EBITDAR, with debt-service cover around 1.5x commonly sought on a deal-specific basis. |
| How long can it take? | Roughly 4 to 8 weeks from a complete file, depending on valuation, credit, lease consent and licence or gaming transfers. |
| What commonly stops approval? | A valuation below price, weak adjusted earnings, short lease residual, unresolved licences or gaming, or no credible management plan. |
What is pub and hotel finance in Australia?
Pub and hotel finance is commercial finance used to buy, build or refinance a licensed hospitality venue, and the thing that sets it apart is that the value lives in the trade as much as in the building. A lender assesses the going concern, the venue as an operating whole: the property where it is owned, the adjusted profit it earns, the tenure it sits on, and any gaming entitlements attached to it. That is a different exercise from a home loan, which reads a property and a payslip, and from a standard business loan, which reads bank statements and a purpose.
The practical consequence is that two venues with the same asking price can borrow very differently, because one earns more reliable profit, owns its land, or holds gaming that the other does not. Buying the bricks alone, an empty building, is a property transaction; buying the operating business with its licence and income is a going-concern transaction, and it is the going concern that a specialist lender is set up to fund. If you want the definition on its own, our going concern glossary entry covers it in a line.
This guide is about pubs and hotels specifically. If your venue is a different accommodation type the read changes, so a motel is financed here, a caravan or holiday park here, and management rights here. Buying the building only, without the trade, is a different transaction again and is funded as property alone rather than as a going concern.
How does pub and hotel finance work?
A pub or hotel purchase is usually funded with a senior facility that covers part of the lender's going-concern valuation, while the buyer contributes cash, equity or supporting property security for the balance and transaction costs. The lender then tests whether the adjusted venue earnings can service the proposed debt with headroom.
How far the senior facility reaches depends on what the lender is holding. A freehold going concern with gaming supports the most, because the lender has land, trade and a separately valuable entitlement behind the loan. A freehold without gaming supports less, and a leasehold is sized inside the remaining lease term because there is no land as security, only the business and the licence. None of this is a fixed formula; it is a read of the specific venue, which is why the order you sequence the capital stack can change what is achievable.
Is freehold or leasehold easier to finance?
Freehold is generally easier to finance overall because the lender takes security over the land, building and operating business. Leasehold finance can still reach a high percentage of the business value, but the loan has no land behind it, usually needs landlord consent and must finish inside the remaining lease term.
| Factor | Freehold going concern | Leasehold |
|---|---|---|
| What you own | Land, building and licensed business | Licensed business plus a lease over the premises |
| Lender security | Registered property mortgage plus business security | Business, licence and gaming security, but no land |
| Indicative gearing | Up to about 65% with gaming; nearer 50% without gaming | Up to about 70% of the going-concern value, subject to lease strength |
| Loan term | Usually longer, broadly aligned with commercial property terms | Capped inside the remaining lease term |
| Upfront capital | Higher purchase price because the property is included | Lower purchase price, but the buyer still funds the equity gap and costs |
| Key conditions | Acceptable property, trade and gaming valuation | Landlord consent, sound residual lease and transferable licences |
The important distinction is percentage versus total security. A leasehold facility may reach a higher percentage of the business value, while a gaming freehold usually provides the strongest overall security and the largest dollar borrowing capacity. See our detailed comparison of freehold versus leasehold pub finance.
How does a hotel management agreement affect finance?
A hotel management agreement can materially affect valuation and loan conditions because ownership and operating control may sit with different parties. A lender checks which entity owns the real estate, operating business, licences, furniture and equipment, then reviews the agreement's term, management fees, performance tests, termination rights and change-of-control consent. A long agreement with weak owner termination rights can reduce flexibility even where the property itself is strong.
How much deposit do you need to buy a pub or hotel?
Indicatively, the equity contribution may be about 35% for a freehold gaming venue and about 50% for a freehold without gaming. A leasehold facility may reach around 70% of going-concern value, leaving roughly 30% plus costs to be covered by cash or supporting security. The lender uses the lower of the acceptable purchase basis and its valuation, so a valuation shortfall increases the buyer's contribution.
| Venue structure | Indicative maximum LVR | Indicative equity gap | Main constraint |
|---|---|---|---|
| Freehold with gaming | Up to around 65% of going-concern value | About 35% plus costs | Trade, property and gaming must all value and transfer cleanly |
| Freehold without gaming | Nearer 50% of going-concern value | About 50% plus costs | Less separately valuable security behind the loan |
| Leasehold | Up to around 70% of going-concern value | About 30% plus costs | Loan term, landlord consent and residual lease strength |
Basis: indicative ranges observed in Switchboard Finance broking work on licensed-venue scenarios, reviewed July 2026. They are not a market-wide average, lender policy or approval promise.
Switchboard broking benchmarks, indicative
- Serviceability: adjusted earnings commonly need to cover debt service by around 1.5 times, deal by deal.
- Timing: roughly 4 to 8 weeks from a complete file to settlement, depending on valuation, credit work, landlord consent and licence transfer.
- Supporting security: usable equity in other property can replace part of the cash contribution, but it does not remove the need for acceptable serviceability and a viable venue.
- Common decline reasons: valuation below price, unconfirmed entitlements, weak adjusted earnings, short lease residual or no credible management plan.
Indicative broking experience as at July 2026 only. These are not lender promises, quotes, approval odds or financial advice. Policy and outcomes vary by venue, borrower and lender.
What financials do pub and hotel lenders assess?
Lenders assess adjusted EBITDA or EBITDAR and commonly look for debt-service cover around 1.5x, although policy varies. They normalise the accounts for one-off, owner-specific and non-recurring items, then test whether the repeatable earnings cover rent, proposed repayments and a buffer.
Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation after defensible add-backs and removals. For leasehold venues, EBITDAR adds rent back so lenders can compare trading performance before different lease costs. Aggressive or unsupported add-backs are usually ignored.
What documents do pub and hotel lenders need?
- Two to three years of financial statements and tax returns where available
- Recent BAS, management accounts and business bank statements
- A schedule explaining normalised earnings and each proposed add-back
- Lease, rent review and landlord-consent details for leasehold venues
- Liquor licence, gaming-entitlement and machine-revenue records where relevant
- Management plan and relevant operating experience, especially for a first-time buyer
- Cash-flow forecast and business plan showing the proposed debt, rent, staffing and working-capital assumptions
- Operator CV or experience summary, especially where the buyer has not previously run a licensed venue
- Contract of sale, information memorandum, asset schedule and details of any hotel management agreement
Clean, reconciled records make the earnings easier to verify and can improve the amount, term and lender choice. The exact documents depend on the transaction and lender.
How is a pub or hotel valued for finance?
A pub is usually valued as a going concern: property value where freehold, plus normalised trading earnings multiplied by an appropriate market multiple, plus separately assessed gaming value. An accommodation hotel is more heavily influenced by occupancy, average room rate and revenue per available room. The lender normally uses the valuer's accepted figure rather than the seller's asking price.
| Component | What it captures | Why it moves the number |
|---|---|---|
| Property component | The land and building where the venue is freehold | Anchors the valuation and is the strongest security a lender holds |
| Adjusted profit x multiple | Normalised earnings times a market multiple for the venue type | Turns the trade into value; clean add-backs lift it, messy books cut it |
| Gaming entitlements | The separate value of any gaming machine entitlements | Can be a large, distinct slice, assessed on its own transfer rules |
| Hotel occupancy, ADR and RevPAR | Occupancy, average daily rate and revenue per available room for accommodation-led hotels | Shows room demand and pricing power where accommodation, rather than bar or gaming, drives the trade |
| Tenure and lease | Freehold, or the strength and length of a leasehold | Sets whether property is in the value at all, and the loan term |
Valuation basis: the appointed valuer and lender determine the accepted value. The table explains the components commonly assessed; it is not a valuation formula.
Because the valuation is assembled this way, the same headline turnover can produce very different lending values depending on how the profit adjusts and how the gaming is held. It is also why an asking price above the going-concern valuation is a common deal-breaker: a lender lends against the assessed value, not the contract price, and the buyer has to cover any gap. Our notes on how lenders value a pub's gaming, bar and room income and on funding the going concern go deeper, and location changes the multiple more than most buyers expect. Where a deal is the building only, without the trade attached, a commercial property loan values it as property alone.
How do liquor licences and gaming entitlements affect finance?
Liquor licences and gaming entitlements affect valuation, security and settlement timing. A lender wants evidence that the liquor licence, any gaming machine entitlements and the buyer's approvals can transfer on time and without losing material value. These transfers are commonly conditions of finance or settlement because the venue cannot trade as intended without them. State rules differ, so check the relevant regulator and the Australian Government's ABLIS service early.
Gaming machine entitlements are a separate asset again, with their own value and their own rules. They are issued in perpetuity in New South Wales, Queensland, South Australia and the Northern Territory, and are term-limited in Victoria, so the same entitlement is a permanent asset in one state and a fixed-term one in another. Some states also condition transfers, for example by forfeiting a share of entitlements when blocks of them move between venues, which can quietly change how many machines a buyer actually ends up with. Because entitlements can be a large slice of value, how they are held and whether they transfer cleanly feeds straight into the loan, as our notes on how gaming entitlements are valued and what a lender takes as security on a licensed venue explain. Licence and gaming rules vary by state, so confirm the position for the venue's state early.
Do liquor licence and gaming transfers have separate fees?
Licence and gaming transfers can have separate government fees. Application, transfer and approval charges sit outside lender establishment, valuation and legal costs. The amount and timing vary by state, licence type and gaming structure, so check the current regulator schedule before the contract becomes unconditional. Even a modest fee can become material if an incomplete approval delays settlement.
How much does pub and hotel finance cost?
There is no single pub or hotel finance rate. Total cost is the lender's base rate plus a risk margin, then establishment or application fees, valuation costs, legal costs, transfer duty and buyer due diligence. The margin changes with tenure, gaming, operator experience, serviceability, LVR and lender type.
Transfer duty is a state tax on dutiable property value and can be a major cash requirement on a freehold purchase. Rates and thresholds differ by state, so calculate it for the venue's location rather than using one national estimate. Compare offers on total cost over the expected term, not the headline rate alone. See the RBA cash-rate page for the changing base-rate environment and the relevant state revenue office for duty.
When is a pub or hotel sale GST-free as a going concern?
A pub or hotel sale can be GST-free as a going concern, but only when all ATO conditions are met. The sale must be for payment, the buyer must be registered or required to be registered for GST, both parties must agree in writing that the sale is of a going concern, and the seller must provide everything necessary to continue operating and carry on the business until settlement. See the ATO guidance on selling a going concern.
Do not assume the treatment from the marketing material or contract heading alone. The GST position changes the cash required at settlement and should be confirmed by the buyer's accountant and solicitor before the contract becomes unconditional. Interest deductibility also depends on how the borrowed funds are used and the buyer's circumstances, so obtain tax advice for the actual structure.
What due diligence is required to buy a pub or hotel?
The finance process usually runs through six steps: choose the tenure, test the trade, obtain indicative lender appetite, negotiate protective contract conditions, complete valuation and credit approval, then satisfy licence, lease and settlement conditions. Starting finance after the contract is unconditional is one of the easiest ways to create a funding gap.
- Confirm what is being bought. Freehold going concern, leasehold business, or property only.
- Normalise the earnings. Reconcile financial statements, BAS, bank statements and defensible add-backs.
- Check the licence, gaming, lease and site. Confirm ownership, transfer rules, encumbrances, residual lease term, landlord consent, zoning, planning, environmental and building-compliance issues.
- Get an indicative structure. Test LVR, serviceability, deposit, supporting security, term and likely conditions.
- Protect the contract. Use appropriate finance, valuation, due-diligence and regulatory conditions with legal advice.
- Complete approval and settlement. Finalise valuation, credit, loan documents, consents and licence transfers.
Reads as a financeable file
- Adjusted financials reconcile to BAS, returns and bank statements
- Gaming entitlements and licences are confirmed and transferable
- Freehold values, or the lease has sufficient residual term and consent
- PPSR, employee entitlements on transfer, zoning, planning, environmental issues and material contracts are checked
Makes a lender nervous
- Trade relies on the departing owner or a one-off event
- Entitlements are unconfirmed, encumbered or reduced on transfer
- Lease residual is short or landlord consent remains unresolved
- Contract price sits above the accepted going-concern valuation
For a first acquisition, see our guide to buying a first freehold venue and the wider accommodation purchase budget.
What security and personal guarantees do lenders require?
Directors and owners are commonly asked to give personal guarantees, and a freehold lender also takes a registered mortgage over the property. The lender may also take security over the business assets, licences, gaming entitlements and company under the PPSR framework. Read the guarantee and security documents together so you know exactly which personal and business assets are exposed.
Because commercial loans carry the lowest level of statutory protection, the safeguards that do matter are the ones you check before signing rather than after. The ASIC guidance on commercial loan disputes is blunt that commercial-only lenders need not hold a credit licence or belong to an external dispute scheme, so external dispute resolution through AFCA exists only where the lender is a member; the Banking Code of Practice adds commitments, but it binds subscribing banks rather than the wider market. The strongest protection a venue borrower has is structuring the deal well and understanding exactly what is secured, which is where our note on what a lender takes as security on a licensed venue helps. General regulatory information, not legal advice.
Which lenders finance pubs and hotels?
Banks, non-bank lenders, specialist hospitality lenders and short-term private lenders all finance licensed venues, but for different risk profiles. Banks often offer the lowest pricing when a strong freehold, established trade and experienced operator fit policy. Non-bank and specialist lenders may accept more complex leasehold, gaming, first-time-buyer or time-sensitive deals at a higher margin.
| Lender type | Typical appetite | Trade-off |
|---|---|---|
| Bank | Strong freeholds, established trade, experienced operators | Often lowest pricing when criteria are met; tighter policy and usually more documentation |
| Non-bank lender | Leasehold, lighter files, first-time operators, quicker moves | More flexible, usually a higher margin for it |
| Specialist hospitality lender | Complex gaming, unusual venues, structured deals | Deep venue knowledge, priced for the complexity |
| Short-term or private funding | Covering a settlement timing gap, not the long-term hold | Usually the highest cost; use only with a defined exit |
For the non-bank map on accommodation deals, see our note on the non-bank lender landscape. Where the issue is purely a settlement timing gap rather than the long-term loan, short-term options such as vendor finance, a caveat loan or private lending can cover the gap, with a clear exit planned from the start.
What sources and methodology support this guide?
Regulatory statements in this guide are tied to primary Australian sources, while the lending ranges are clearly identified as first-hand broking benchmarks. The LVR, equity, DSCR and timing figures reflect Switchboard Finance experience discussing and placing licensed-venue scenarios. They are indicative ranges, not a market survey, lender policy, quote or prediction of approval.
How to read the figures: percentages are applied to the lender's accepted going-concern value, not automatically to the contract price. “Up to” means a possible ceiling in a suitable scenario, not a normal outcome. Fees, duty and working capital sit outside the stated equity gap unless expressly included.
Last reviewed 5 July 2026. Rules, lender appetite and pricing can change; verify live policy and regulator requirements before relying on a figure.
Pub and hotel finance is sized against the accepted going-concern value and the venue's repeatable earnings. A buyer usually combines a senior facility with cash or supporting property security. Freehold gaming venues provide the strongest overall security, while leasehold facilities can reach a high percentage of business value but must finish inside the lease. Valuation, licence transfer, gaming, serviceability and the buyer's management plan determine the final structure.
Key takeaway: ask how much the lender will advance against the accepted valuation, what equity and costs you must fund, and which conditions must be cleared before settlement.Frequently Asked Questions
Indicatively, a buyer may need about 35% plus costs for a freehold gaming venue, nearer 50% plus costs for a freehold without gaming, and roughly 30% plus costs for a suitable leasehold. The lender applies its LVR to the accepted going-concern value, so a valuation below the purchase price increases the buyer's contribution. Supporting property equity may replace part of the cash.
Yes. Banks, non-bank lenders and specialist hospitality lenders finance hotels where the valuation, repeatable earnings, borrower experience, equity contribution and security are acceptable. Accommodation-led hotels are commonly assessed using occupancy, average daily rate, RevPAR and adjusted operating earnings. The precise structure depends on whether the transaction is freehold, leasehold or subject to a hotel management agreement.
Choose the ownership structure, prepare the financial and operating documents, obtain indicative lender appetite, negotiate finance and valuation conditions in the contract, complete the going-concern valuation and credit assessment, then satisfy lease, licence, management-agreement and settlement conditions. The senior facility funds part of the accepted value and the buyer covers the equity gap and transaction costs.
A complete licensed-venue file may take roughly 4 to 8 weeks from application to settlement. The valuation, lender credit process, landlord consent, liquor-licence transfer, gaming approvals and legal work can extend the timeframe. A complete application pack and finance conditions that allow enough time reduce settlement risk. This is an indicative broking range, not a lender promise.
Common requirements include two to three years of financial statements and tax returns where available, recent BAS, management accounts, business bank statements, normalised earnings and add-backs, the contract or information memorandum, asset and debt schedules, lease and landlord-consent details, licence and gaming records, a cash-flow forecast, business plan and evidence of relevant operating experience.
Yes, but the lender normally expects a stronger management case. Relevant hospitality or management experience, a credible business plan, adequate equity or supporting security, clean financial records and a venue that does not depend on the departing owner all help. A strong freehold with established trade is generally easier for a first-time operator than a marginal leasehold with a short residual term.
The lender normally calculates the facility from the accepted valuation rather than simply the contract price. If the valuation is lower, the buyer must contribute more cash or supporting security, renegotiate the price, change the structure or find another lender. A larger loan does not automatically solve the problem because the venue must still meet the lender's maximum gearing and serviceability requirements.
Usually, yes. The lender commonly requires the lease to transfer, the landlord to consent and the remaining lease term to extend beyond the proposed loan term with any required buffer. The lender also reviews rent, review clauses, options, defaults and assignment conditions. A short or weak lease can reduce the loan term, increase repayments or make the deal unacceptable.
No. The ATO conditions must all be met: the sale is for payment, the buyer is registered or required to be registered for GST, both parties agree in writing that the sale is of a going concern, and the seller provides everything needed for continued operation and carries on the business until settlement. The buyer should obtain tax and legal advice before becoming unconditional.
There is no single standard term. Freehold facilities can use longer commercial-property-style terms because land and buildings support the loan. Leasehold facilities must normally finish before the lease expires and may require a lender buffer, so a short residual lease can force a shorter term and higher repayments. The final term depends on security, serviceability, lender policy and the remaining lease.
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