A pub is a unique business and pubs vary significantly from the traditional local to the country pub, a city wine bar to a national chain. As you would expect, there are different types of funding available to pubs from a wide source of lenders.
Publicans can obtain Commercial Mortgages, secured on the freehold premises, for a number of different reasons:
Pub funding can be obtained for:
Traditionally the large breweries have provided loans to publicans. These brewery loans are at a relatively low rate of interest making them an attractive option for pub finance. In exchange for the low interest rate, the publican is contracted to buy all beer, wines and spirits from the brewery at full price.
Brewery loans are also structured whereby interest rates are reduced even further provided target sales are met.
Due to consolidation in the brewery sector, many tied pubs have been sold off. These independent pubs are now free to source their own suppliers, and breweries are competing for their business by offering discounts to pubs. Sometimes these discounts can be quite substantial for volume purchases.
Brewery loans used to be a cost effective way of financing a pub, and still have an important part to play with smaller pubs. However many pubs are now finding that it is much more cost effective to replace brewery loans with a Commercial Mortgage. This has the advantage of not being tied to one supplier and the ability to receive improved margins due to receiving supply discounts.
Use our Online Enquiry Form or Contact Us on 0800 0735353 to arrange an initial visit with one of our consultants.