Micropub, brewpub and taproom finance

How we fund micropubs, brewpubs and taprooms

We fund these venues with a mix of property, fit-out and asset finance matched to the small, craft model. Where the unit is freehold, we arrange a commercial mortgage on the going-concern trade to around 60 to 65% of value; where it is leasehold, which is common, we fund the lease, the fit-out and the working capital on the trade and the lease terms. Many micropubs and taprooms are conversions of a former shop or unit, so we arrange development and conversion finance for the change of use into the Sui Generis pub use class and the fit-out from a bare shell, with bridging at an indicative 0.8 to 1.5% per month where the unit needs securing first. For brewpubs and taprooms, the brewing kit and cellar equipment are usually funded on asset finance secured against the kit itself, separate from the property facility, which keeps the property lending focused on the bricks or lease and spreads the cost of the equipment. Across the mix, indicative pricing runs from around 8 to 14% per annum. Every figure is indicative and never an offer; the terms depend on the trade, the tenure, the planning and the operator.

Lender appetite for micropubs, brewpubs and taprooms

Micropubs, brewpubs and taprooms draw appetite from a specialist field, because the lot sizes are small, many are leasehold, and the equipment and change of use need lenders who understand the model. Specialist leisure and trade-business lenders and some challenger banks such as Allica Bank fund the property or lease and the working capital on the going-concern trade, asset finance houses fund the brewing kit and cellar equipment against the equipment itself, and bridging and development lenders back conversions and change-of-use schemes. Lenders weigh the maintainable trade against the low overhead of the model, the lease or freehold, the planning and change-of-use position, and the operator, who in a small owner-run venue carries much of the case. As an arranger and introducer with no exclusive tie, we assemble the property, fit-out and asset finance from the lenders most comfortable with each piece, rather than expecting one lender to fund the whole.

The micropub, brewpub and taproom market

Micropubs and taprooms have grown as the craft and independent end of the market has expanded, taking advantage of low overheads, small footprints and a loyal following for well-kept, distinctive beer. They are cheap to enter relative to a full pub, which widens the operator pool, and many occupy converted retail units that were brought into pub use, so the planning and change-of-use position is part of how the asset is read. The watchpoints for a lender are scale and reliance on the operator: turnover is modest, the venue is usually owner-run, and a brewpub adds the production risk of brewing alongside retailing. The exit is typically a sale of the going concern and the lease, or of the freehold and equipment where owned, to another craft operator. We present the trade, the tenure, the planning and the brewing kit so the case is funded and exited on a realistic view of a small, craft-led business.