Pub & Hotel Finance · First-time buyers welcome
Yes, you can finance a pub.
Most banks see hospitality risk and a buyer they do not understand. We see the going concern, the gaming and the tenure, the things that actually decide the loan. First pub or fourth, we know which lenders say yes.
Business-purpose finance for licensed pubs and hotels, read on the trade, not your payslip.
What the lender reads first.
A pub is valued on its trade, not its postcode. Three things set the number.
Poker machine entitlements are a separately valued, tradeable asset, often worth more than the freehold itself. Perpetual in NSW, QLD, SA and the NT, term-limited in Victoria.
Gaming is not just a licence.
On a gaming venue, the entitlements are often the main event, not a footnote.
The confusion
Gaming entitlements are just a permit
Many first-time buyers treat the machines as a bonus sitting on top of the pub. They are not. Read that way, the deposit and the valuation never line up.
The reality
A separately valued, tradeable asset
Entitlements carry their own value inside the going concern, perpetual in NSW, QLD, SA and the NT, term-limited in Victoria. Always confirm which entitlements are included in the sale.
Entitlements can be stripped out before a sale. Confirm what is included in writing, with your solicitor.
How a pub gears.
The loan is built on the going concern: the senior facility funds the bulk, and the deposit, in cash or supporting security, fills the rest.
The same venue, read two ways.
Land, business and gaming
You own the lot and gear highest. The only model that carries capital growth, because you hold the land and the entitlements under the trade.
The business, under a lease
Cheaper to enter and higher return per dollar in, but a diminishing asset. The loan term sits inside the remaining lease.
The going concern valuation makes or breaks it.
The loan is set on what the venue is worth as a trading business, not the asking price. Three things make up that number.
A valuer works off the adjusted net profit, the real earnings after addbacks, and a conservative going-concern figure can sit below an optimistic asking price. The bigger trap is gaming: entitlements can be stripped out of a venue before settlement, so a pub that looks like a gaming asset can settle without the machines. Confirm which entitlements are included, and how they are held, before you commit. Packaging that cleanly is the work that earns its keep.
How a pub file is built.
Documents and structure are your accountant's and solicitor's work. We arrange the facility and read the going concern the way a lender will.
Four things that get a pub deal across.
Specialised security means the case has to be presented well. Four levers do most of the work.
From enquiry to settlement.
A pub purchase follows a clear path. The going concern is confirmed early, so nothing is rushed at the end.
Pure timing pressure between exchange and settlement is a job for private lending or a caveat loan, not the purchase facility.
Why hospitality is read this way.
Three reasons stack up. Tap each.
A pub is bought for what it earns. Lenders value the trade and the gaming, not a price per square metre, which is why the going concern, not the postcode, sets the loan.
Going concern, or just the bricks?
Buying the going concern
Pub finance
A going concern business loan, assessed on the trade, the gaming and the tenure, structured through your trading entity. It sits alongside vendor finance when a carry closes the last slice of the price.
Owning the bricks
Commercial property or low doc
Buying a freehold to lease to an operator, or borrowing on alternative documentation, is a different product: a commercial property loan or low doc, not a going concern business loan.
Pub finance, answered.
Most pub purchases use a business loan for the bulk, your deposit (cash or property equity) for part, and sometimes a vendor carry from the seller for the last slice. It is judged on the pub's trade, gaming and tenure, not your personal income.
Yes, first-time operators are funded regularly. Experience helps, so a clear plan and the right management around you matter, but a lack of it is something to present well, not a closed door.
As a guide, around 35 percent for a freehold with gaming (up to about 65 percent borrowed), nearer 50 percent for a freehold without gaming, and up to about 70 percent of the going concern for a leasehold. Property equity can stand in for cash. Ranges, not a fixed offer.
Yes. A pub trading on food and drink alone usually borrows a little less, around 50 percent, because the income is seen as more discretionary. Securing another property against the loan is the usual way to lift it.
Some do and many do not. A leasehold pub is financed against the lease and the trade, needs the landlord's consent, and the loan sits inside the remaining lease. A specialist broker reaches the lenders who fund it.
As a separately valued, tradeable asset inside the going concern, perpetual in NSW, QLD, SA and the NT, and term-limited in Victoria. Always confirm which entitlements are included in the sale.
In Australian usage, usually yes. A hotel is most often a licensed pub, and the finance is the same. Accommodation hotels and motels are a different category, covered under motel finance.
Thinking about a pub? Let's see if it works.
Tell us about the pub, or just ask a question. No credit check, no obligation, and a straight answer on whether the money stacks up and which lenders fund it.
By Nick Lim, founder of Switchboard Finance. Years on the lender's side deciding which deals got a yes, now on yours. Credit Representative 576702 under ACL 384704 (Finsure). General information, not credit, legal or tax advice.