Quick answer
Pubs and bars borrow to buy a venue or a lease, refurbish bars and beer gardens, upgrade cellars and kitchens, and cover cash flow between busy seasons. How a lender assesses you depends on what you own: a freehold pub is property-backed, a leasehold venue is valued on its profit and lease term, and a small bar relies mostly on trading history. Gaming revenue usually gets a more cautious look than food and beverage income.
Key points
- Freehold, freehold going concern, leasehold and small bar deals are assessed in completely different ways
- In NSW, gaming machine entitlements belong to the hotel licensee and can be worth a large share of a venue's value
- Lenders tend to discount gaming income because poker machine rules keep tightening, so food and beverage trade carries more weight
- Cellar, kitchen and refrigeration equipment can be financed separately, keeping the main loan smaller
A licensed venue is really two or three businesses under one roof: a bar, often a kitchen, sometimes a bottle shop, a function room, accommodation upstairs or a gaming room. Each earns money differently, and lenders weigh each one differently. That’s why two pubs with the same turnover can get very different loan offers.
The single biggest factor, though, is what you actually own. Get clear on that and the rest of the finance picture makes sense.
Freehold, leasehold or small bar: why does it matter so much?
Licensed venues come in a few shapes, and each one lands with a lender in its own way.
| What you own | What backs the loan | How lenders usually approach it |
|---|---|---|
| Freehold going concern (land, building and business) | The property, plus the trading business | Commercial property loan, often with a separate facility for goodwill and stock |
| Freehold only (you own the building, someone else runs the pub) | The property and the tenant’s lease | An investment property deal; the lender looks hard at the lease and the tenant |
| Leasehold (you own the business and the lease, not the building) | Profit, lease term and any other security you offer | Valued on earnings; lower lending against the business itself, often more security needed |
| Small bar or licensed lounge | Trading history and director support | Sized on card takings, or secured on property you own elsewhere |
The leasehold case is where many deals come unstuck. Without land behind it, the lender’s comfort rests entirely on the venue keeping its profits up at that address. The number of years left on the lease, including options, can make or break the application. A lease with 18 months to run is very hard to borrow against. One with 15 years to run is a different conversation.
How do lenders look at gaming income?
Gaming rooms can make up a big slice of a hotel’s earnings, and lenders know it. They also know the rules keep shifting.
In NSW, a hotel needs a gaming machine entitlement for each machine it operates, up to a maximum of 30, and a hotel with more than 10 machines must keep them in a separate gaming room. Entitlements belong to the licensee. They can be moved between venues, but most transfers mean forfeiting one entitlement for every block of two or three. Hotels holding 10 or fewer can lease entitlements to other hotels with approval from the Independent Liquor and Gaming Authority. Those details matter, because entitlements can make up a substantial part of what a NSW pub is worth.
In Victoria, Parliament has been working through mandatory pre-commitment and carded play for gaming machines, including a lower limit on how much can be loaded into a machine at once.
What this means for borrowing: many lenders apply a heavier haircut to gaming revenue than to bar and food revenue, and some cap how much of the loan can rely on it. A venue whose earnings lean heavily on its gaming room may borrow less than its headline profit suggests. One with strong food, functions and beverage trade usually gets the benefit of the doubt.
What do pubs and bars typically borrow for?
- Buying a venue or a lease. Our pages on business acquisition loans and buying a business cover the mechanics.
- Refurbishment. Bistros, beer gardens and bathrooms date quickly, and a tired venue loses its crowd. See renovating business premises.
- Cellar and bar equipment. Glycol systems, cool rooms, ice machines, glasswashers and POS hardware.
- Kitchen upgrades. Many pubs now earn as much from food as from beer. Our restaurant business loans page covers kitchen finance in more detail.
- Accommodation rooms. Country pubs with rooms upstairs sometimes borrow to refresh them. The hotels and motels page explains how lenders view accommodation income.
- Tax and cash flow. A slow winter or a big BAS quarter can leave a gap.
Got a refurb quote or a venue in your sights? Send us the basics: it’s about a minute online, and asking has no effect on your credit rating.
Which kinds of finance fit a licensed venue?
Commercial property loans suit freehold purchases and refinances. Banks are often excellent here and frequently the cheapest option for an experienced publican with a solid track record, so a bank offer deserves a close look. If the bank declines, non-bank and private lenders can step in, sometimes with lower lending ratios or shorter terms. Our commercial property loans page goes through the details.
Equipment finance keeps cellar, kitchen and gaming-room fit-out costs off the main loan. Because the equipment is the security, approval is usually simpler, and it preserves your working capital. See equipment finance.
Unsecured business loans suit smaller refurbs, stock for a big season or tax bills, sized on your card takings. They’re quicker but cost more. Read about unsecured business loans.
Second mortgages and caveat loans suit owners who hold property and need a larger sum fast, for example to complete a purchase when the main lender runs late. See second mortgage business loans.
What risks and seasons do lenders weigh up?
- The licence itself. A lender will ask about breaches, complaints or conditions on the licence, and any change of licensee needs regulator approval before settlement.
- Seasonality. Summer, major sporting finals and the run to Christmas are strong. Winter beer gardens are quiet, and regional pubs can swing with harvest, mining shifts or tourism.
- Supplier tie-ins. Upfront money from a beverage supplier in return for exclusive supply is common. Lenders will want to see the agreement and any payout clause.
- Staffing and penalty rates. Late nights, weekends and public holidays all carry higher wage costs, and payday super since 1 July 2026 means super leaves with every pay run.
- Concentration in gaming. As above, gaming-heavy earnings attract a more cautious view.
Our debt service coverage ratio calculator shows how comfortably your venue’s earnings cover a proposed repayment, which is the same test most commercial lenders run.
What paperwork should a publican gather?
- Profit and loss statements for the past two years, split by bar, food, gaming and accommodation if possible
- Business bank statements showing recent takings
- The liquor licence details and, for NSW hotels, a list of gaming machine entitlements held
- The lease, including options and rent reviews (for leasehold venues)
- Contract of sale and any information memorandum (for purchases)
- Any beverage supply agreement
- An ATO portal statement and recent BAS
- Title details for any house or commercial site that could sit behind the loan as extra comfort
Worked example: a leasehold country pub
A made-up scenario for illustration. A couple with eight years of pub management experience want to buy the leasehold of a 12-room country hotel in regional NSW for $850k. The pub earns most of its profit from bar and bistro trade, with six gaming machines. The lease has 12 years to run including options.
The bank is willing but wants to lend only part of the price against the business itself. The couple contribute $250k from savings and offer a second mortgage over their own home behind its existing loan. Separately, they finance $70k of new cellar and kitchen equipment so the purchase loan stays smaller. Because the gaming income is modest, the lender treats almost all of the profit as dependable, and the repayments are covered comfortably on the bar and bistro figures alone.
Ready to talk about your venue?
Licensed venues reward owners who understand what they’re really buying and borrowing against. If you’ve worked out whether you’re dealing with freehold, leasehold or a small bar, you’re already ahead of most applicants.
Tell us about the venue and what you need. The form is a sixty-second job, and your credit file isn’t pulled just because you asked. We don’t hand your enquiry around a dozen funders, so expect a single call rather than a flood: it comes from a specialist who has read through the venue’s numbers and wants to talk options. Please be straight about gaming income, lease years and any supplier deals, because honest detail up front is how a workable structure turns up on the first go.
Frequently asked questions
Can I get a loan to buy a pub?
Yes. Freehold going concern pubs are usually financed with a commercial property loan, sometimes alongside a business loan for the goodwill and stock. Leasehold pubs are harder, because the lender's security is the business and its lease rather than land, so expect a larger deposit or additional property security.
Do lenders count poker machine revenue?
Usually, but cautiously. Gaming reform in NSW and Victoria has made lenders wary of relying on gaming income alone, so many apply a heavier discount to it than to bar and food revenue. A venue with balanced trade across bar, food, functions and gaming tends to borrow more comfortably.
Are gaming machine entitlements security for a loan?
In NSW, gaming machine entitlements are held by the hotel licensee and can be transferred or, for hotels with ten or fewer, leased with regulator approval. Some lenders take them into account as part of a venue's value, but treatment varies widely, so ask each lender how it views them.
Can a small bar get a business loan?
Yes. A small bar with a year or more of steady card takings can often get unsecured funding sized on turnover. Newer small bars usually need property security or a director guarantee, since there's little in the venue a lender could sell.
How long does pub finance take?
A freehold pub purchase runs on a property timeline, with valuations, licence transfer approval and settlement, so allow several weeks at least. Equipment finance and unsecured loans for an existing venue can often be arranged within days.
Will a brewery supply deal affect my loan?
It can. Some venues accept upfront money or equipment from a beverage supplier in return for a tied supply agreement. Lenders will want to see the agreement, because early termination clauses and repayment obligations can affect your cash flow.