The pub is a British institution. With more than 50,000 still trading across the
However, raising finance can be one of the biggest challenges for publicans and would-be publicans alike.
Whether you want to raise finance for a pub you already own or want to purchase licensed premises, it’s important to understand that lenders do not have set products which they pluck off the shelves.
When it comes to commercial finance, they will consider all aspects of each individual application when deciding whether or not they can support the proposal, how much finance they are able to provide, and the terms on which they will provide it.
So what factors do you need to consider when looking for pub finance? What are the main considerations for lenders when processing an application?
We’ve highlighted the five main areas for you below:
1. Ability to repay
This one goes without saying. If you are going to borrow finance for a pub, or indeed for any other business, any lender needs to be assured that you can afford to pay them back the interest each month (and capital if the loan is on a repayment basis).
The main way that lenders judge this is from the accounts of the pub itself. So as a general rule, it is easier to get finance for a pub with a high turnover and healthy profit than one which only has wet sales and is making a loss.
Does this mean you
Lenders prefer providing finance for a freehold pub rather than a leasehold pub, simply because they have security in the property’s value. Some lenders will consider other forms of security as well, which can only enhance any application for finance.
3. Background and experience
When it comes to arranging finance for pubs, having relevant experience is important. The pub industry can be challenging, and therefore lenders take a positive view if an applicant has managed or worked in a pub environment before.
It simply provides lenders with the confidence that the applicant knows the industry and what it takes to run a successful pub. Even experience in similar industries – such as hotels or restaurants – can result in beneficial terms being provided.
4. Level of investment
One of the key questions any lender will ask is how much the borrower is putting
This could either be in the form of a cash contribution towards any purchase
5. The lender
Finally, the lender itself is important. Different lenders have different appetites for different sectors, and these appetites are changing all the time.
Therefore it is
And as increased regulation and red tape can make dealing with some lenders a potential minefield, it is particularly important to identify the most respected
As you can see, there are many different factors which lenders consider when ascertaining the level of finance they can provide to aspiring and current publicans and the above list is only the tip of the iceberg.
Remember that they consider each case on its own merits, so the stronger your application is on these points, the greater your chance of securing the finance you need.
ASC Finance for Business