Pub & Hotel Finance for Operators
Pub finance: the going concern is the asset, gaming and all.
When the venue has gaming and you are buying the freehold or the lease, the loan turns on the going concern, not your payslip. Most banks see hospitality risk. We know which lenders see the trade.
Business-purpose lending for licensed venues, structured around gaming, tenure and a clean valuation.
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.
Business-purpose lending to buy or refinance a licensed pub or hotel. It is assessed on the going concern valuation, the tenure, the gaming entitlements and the trade, not on a personal income calculator.
As a working guide, a freehold with gaming sits around a 35 percent deposit (up to about 65 percent LVR), a freehold without gaming nearer 50 percent LVR, and a leasehold up to around 70 percent of the going concern. Supporting security can bridge the gap. Ranges, not a fixed offer.
Yes. A freehold pub trading on food and beverage alone is usually capped lower, around 50 percent LVR, because the income reads as more discretionary. Cross-securing another property is the common way to lift the borrowing.
Some do and many do not. A leasehold pub is financed against the lease and the going concern, so the lender needs a deed of consent from the freeholder and the term is set 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, and how they are held.
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.
Pub purchase finance is a going concern business loan assessed on the trade and a business plan, a different product to the property-secured low doc and alt doc loans used on standard residential and commercial property. Expect to provide proper figures, supported by your accountant.
Buying a pub, or releasing equity from one?
Freehold or leasehold, gaming or wet-led, we can show you what is fundable, where the deposit lands, and which lenders fund it.
By Nick Lim, founder of Switchboard Finance. Credit Representative 576702 under ACL 384704 (Finsure). General information, not credit, legal or tax advice.