Why two similar pubs get different loan offers: what sets the margin on pub and hotel finance, how each portion is priced, and what a buyer can change.
Accommodation Finance Hub
Pub and Hotel Finance · Loan Rates · Margin
Picture two illustrative pubs with similar trading. One is a freehold country pub with a gaming room, bought by an operator who has run venues before. The other is a leasehold suburban hotel with no gaming, bought by a first-time operator. They take their files to lenders in the same week and come back with quite different offers. This insight walks through why, and what the second buyer can change.
Quick Answer
The rate on a pub or hotel loan is a base rate plus a margin, and the margin moves with the security, the trading, gaming, the operator and the lender type, which is why two similar pubs can get quite different offers. Most venue facilities are variable, so the base follows the market while the margin follows your venue: the land and buildings, the going concern business, and the evidence behind both.
Also called: hotel loan rates, pub loan interest rates, hotel financing rates. Same question; in Australian searches "hotel" often means a licensed pub rather than accommodation.
What sets the rate on a pub or hotel loan?
The rate on a pub or hotel loan is a base rate plus a margin: the base tracks the lender's own funding cost, and the margin is what the lender adds for the risk of this venue and this borrower. In its May 2026 Bulletin, the Reserve Bank describes variable-rate business loans as typically priced off short-term rates such as the cash rate or the bank bill swap rate. New variable business rates fell through 2025 and have risen in 2026 in line with those short-term rates, and fixed-rate lending remains a small share of business lending.
For a pub buyer, that means most offers arrive variable, with a fixed portion as an option rather than the default. The base is largely set by the market and is much the same for every venue a lender funds that week. The margin is where your venue is read, and it is the part that differs between two offers.
If you want the general method for building a business loan rate, how commercial property loan rates are calculated walks through it. This insight stays on what is specific to licensed venues. One note on wording: everything here applies to pubs and hotels in the licensed sense. An accommodation hotel or motel is read differently and has its own motel finance page.
Why do two similar pubs get different margins?
Two similar pubs get different margins because a lender prices the risk behind each venue, not the turnover alone, and that risk sits in the security, the trading record, the gaming mix, the operator and the lender chosen. The table follows the two illustrative venues from the top of this page through each driver.
| Driver | Freehold country pub with gaming, experienced operator | Leasehold suburban hotel, no gaming, first-time operator | Effect on the margin (indicative, varies by lender) |
|---|---|---|---|
| Security | Land and buildings plus the business | The business, the lease and the equipment only | Property security usually narrows the margin; business-only security usually widens it |
| Trading figures | Several years of reconciled figures under the same operator | The previous owner's figures, not yet proven under the new operator | Trading the lender can verify typically earns a tighter price |
| Gaming | A gaming room with a steady revenue share | No gaming | Depends on the lender: some count steady gaming income as stable, others discount it |
| Operator experience | Has run licensed venues before | First venue | Demonstrated experience typically narrows the margin |
| Deposit | A larger contribution | A smaller contribution | Lower gearing usually means a lower margin |
| Lender type | A major bank or tier-2 lender is likely | A non-bank lender or specialist funder is more likely | Lender appetite sets the starting point before any of the rows above |
In practice, neither offer is wrong. Each is the lender's read of a different file, and the gap tends to narrow as the second venue builds the record the first already has. Most venues sit with a mix of the two lists below.
Priced tighter
- Land and buildings in the security
- Trading the lender can verify
- An operator with venue experience
- Lower gearing
- All facilities with one lender
Priced wider
- Business-only security on a short lease
- Figures that need explaining
- A first-time operator
- Higher gearing
- Gaming income the lender discounts
Why is the property portion priced differently from the business portion?
The property portion and the business portion are priced differently because they are secured by different things and carry different risks of loss. On a freehold purchase, many lenders split the deal into a facility over the land and buildings and a separate facility for the going concern business, its goodwill, fit-out and equipment.
The property facility is secured by real estate a valuer can price on its own. The business facility relies on trading, and on goodwill that can lose value quickly if the venue falters. That is why the business portion typically carries the wider margin, often a shorter term, and frequently a general security over the business plus guarantees from the directors.
When you compare offers, compare each portion separately. A sharp rate on the property facility can sit beside a wide margin on the business facility, and the blended number hides which is which. Our pub and hotel finance page shows how a lender splits one venue's value between the two.
How do gaming, the licence and the trading figures move the margin?
Gaming, the licence and the trading figures move the margin because together they decide how stable the lender thinks the venue's income is. Gaming can change the margin as well as the value, and how depends on the lender: some lenders treat a steady gaming revenue share as dependable income and, where entitlements are held by the venue and can be transferred, take them as part of the security. Others discount gaming income or cap how much of it they count.
The licence matters through its conditions: trading hours, any compliance history, and whether it transfers cleanly at settlement. The trading figures matter most. Reconciled accounts, BAS, point of sale reports and gaming data that agree with each other typically earn a tighter price than figures that need explaining, whatever the venue's turnover.
How gaming entitlements themselves are valued and secured is covered on the pub and hotel finance money page. A bottle shop attached to a hotel is usually read on its own trading; bottle shop finance explains how.
Does buying freehold or leasehold change the rate?
Buying freehold or leasehold changes the rate mainly through security: a freehold purchase gives the lender land and buildings, while a leasehold purchase gives it a business whose value depends on the lease. On a freehold deal, the property portion can usually be priced closer to commercial property lending, which pulls the blended rate down.
On a leasehold deal, the whole loan sits against the business, so the margin is typically wider and the loan term is held inside the remaining lease, including options. A short lease with no options can widen the price, shrink the loan, or both. Which of the two is easier to finance in the first place is covered in the pub and hotel finance guide; this section is about price only.
How do bank, non-bank and private lender pricing differ for licensed venues?
Bank, non-bank and private lender pricing differ because each funds itself differently and has a different appetite for licensed venues. Major banks typically price lowest for venues that fit their policy: strong security, clean trading and an experienced operator. A non-bank lender or specialist funder tends to take the venues banks decline or restrict, such as a first-time operator, a leasehold business or a heavier gaming mix, and prices for that extra risk.
Private lenders are usually the most expensive and the fastest, used for short terms while a purchase settles or a refinance is arranged; private capital for a fast accommodation purchase covers when that trade-off makes sense. Because bank appetite for licensed venues varies widely, the lender type often sets the starting margin before the venue is read at all.
| Measure | Share | As of |
|---|---|---|
| Non-bank lenders' share of Australian financial system assets | About 6 per cent | Reserve Bank, March 2026 |
| Private credit's share of Australian financial system assets | Less than 2 per cent | Reserve Bank, March 2026 |
Sources: Reserve Bank of Australia, Financial Stability Review, March 2026, released 19 March 2026. Read 23 October 2026.
The shares explain a pattern pub buyers notice. Non-bank lenders and private credit hold a small share of the financial system, yet they fund many of the venues banks decline or restrict. Venue buyers who start with a non-bank often plan the move to a bank once the new operator has built a trading record.
Which costs sit around a pub loan rate?
The costs around a pub loan rate are the fees and charges that never show in the headline number but change what the loan really costs: the going concern valuation, legal costs on both sides, establishment fees, line fees on trading facilities and break costs on any fixed portion.
- Valuation. A licensed venue usually needs a valuation of the business as a going concern as well as the property, which typically costs more than a property-only valuation.
- Legal costs. The lender's legal costs are usually passed to the borrower, on top of your own solicitor's work on the contract, the lease and the licence.
- Establishment fees. Often charged as a share of the limit, varies by lender.
- Line fees. Overdrafts and other trading facilities often carry a fee on the full limit, whether it is drawn or not.
- Break costs. Fixing part of the loan can mean a cost to exit early if rates move against the lender.
Licence and gaming transfer fees are separate again, and the guide's section on licence and gaming transfers sets them out. A comparison rate is a consumer credit disclosure, so most business facilities will not quote one. Compare offers on their full cost instead, using the all-in cost method in the commercial property rates insight.
What can a pub buyer change before applying to get a sharper offer?
What a buyer can change before applying is more than most expect: the deposit, the quality of the trading and gaming data, the evidence of experience, the security offered and how the facilities are structured all move the margin, and all of them can be worked on before an application goes in.
- Lift the contribution. A lower loan to value ratio typically narrows the margin, indicative and varies by lender.
- Get the vendor's figures in order. Ask for reconciled accounts, BAS, point of sale and gaming reports that agree with each other, before the lender asks.
- Show your experience. Licensed venue roles, a licensee or manager with a track record, or an experienced partner can stand in for a first-time operator's history.
- Offer the security you have. Additional property security can bring a business portion closer to property pricing, varies by lender.
- Keep the facilities together. One lender holding the property, business and trading facilities may price the whole relationship more sharply.
- Plan the refinance. If the first offer is priced wider because the trading is unproven, refinancing after a period of clean trading is often the path to a tighter margin.
The second pub in the comparison above can close much of the gap on the first by working through that list. If you want to see where your venue sits now, check eligibility before you sign a contract. For how this plays out in one state, see pub finance in Sydney and New South Wales; for late-trading venues, see bar and nightclub finance. More venue guides sit in the accommodation finance hub and the property lending hub.
The rate on a pub or hotel loan is a base rate plus a margin. The base moves with the market; the margin moves with the venue: how the property portion and the business portion are secured, the trading and gaming data, the operator's experience, the deposit and the lender type. Two venues with similar trading can receive very different offers, and much of that gap sits within the buyer's control.
Key takeaway: compare each portion's margin and the full cost of every offer, then work on what a buyer can change before applying.Frequently Asked Questions
Interest rates for hotel loans are priced as a base rate plus a margin, so there is no one figure that applies to every pub or hotel. The base follows short-term market rates, while the margin depends on the security, the trading record, gaming, the operator's experience and the type of lender. A lower loan to value ratio and verified trading typically bring the margin down, though this varies by lender.
Gaming can make a pub loan cheaper or dearer, depending on how the lender reads gaming income. Some lenders count a steady gaming revenue share as stable income and take transferable entitlements as part of the security under a general security agreement, which can narrow the margin. Others discount gaming income or cap how much of it they will count, which can widen it.
Leasehold pub loans are usually priced higher than freehold pub loans, because the lender has no land and buildings to fall back on. The whole loan sits against the business and its leasehold interest, so the term is held inside the remaining lease and options. A long lease with options and strong trading can narrow the gap, though this varies by lender.
Hotel loan rates are higher than home loan rates because a pub loan is a business loan secured partly or wholly by a trading venue, not by a home. The lender assesses serviceability on the venue's trading, prices goodwill that can lose value quickly, and carries more cost to manage and recover the loan. On a freehold purchase, the property portion is usually priced closer to commercial property lending than the business portion.
A broker can often get a better rate on a hotel loan by putting the venue in front of lenders whose appetite fits it and presenting the trading, gaming and experience evidence the way each lender reads it. A broker cannot change the venue's risk, but can make sure it is priced on its best evidence and that offers are compared on full cost. Late-trading venues show how much appetite varies; bar and nightclub finance explains why.
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