Pub refinance and capital raising

Who can borrow and what lenders look for

A refinancing lender underwrites the pub much as an acquisition lender would: the wet and dry split, the barrelage, any food and accommodation income, the tie and tenure, and the trading accounts, sized so that EBITDA covers the new debt service with headroom. The advantage on a refinance is history: instead of projections, the lender sees how the pub has actually traded, which usually makes for a cleaner case. A pub that has lifted turnover, grown its food trade or added letting rooms since the last loan presents well and supports better terms. A capital raise changes the conversation about purpose: lenders are comfortable releasing equity for a clear, value-adding use such as a deposit on the next pub, a refurbishment that lifts trade, or consolidating dearer debt, and less comfortable with capital simply taken off the table, so the reason for the raise is part of the case. Where the refinance consolidates several facilities, perhaps a term loan, a refurbishment bridge and an equipment line, the lender wants to see that the single new facility is comfortably covered and that the structure is genuinely cleaner rather than just larger. Where a pub with living accommodation is owner-occupied as an individual's home, a regulated element can arise, which we refer to an authorised firm. We assemble the trading story, the purpose of any capital raised and the value evidence so the lender sees the pub at its best, and we check the maths on any early repayment charge before recommending a move.

How much you can borrow

Refinance loans are sized like acquisition loans, indicatively up to around 60 to 70 percent of the going-concern value, and constrained by interest cover on EBITDA rather than by loan to value alone. The opportunity on a refinance comes from change since the last loan: if the pub is now worth more, or trades better, the same property supports a larger facility, and the difference between the new loan and the redeemed debt is the capital you can release, net of fees and any early repayment charge. The arithmetic is worth spelling out: the gross capital available is the new loan less the debt redeemed, and the net cash in your hand is that figure less the arrangement fee, the valuation, legal costs and any early repayment charge on the facility being cleared. A keen headline loan to value can disappoint once those deductions are counted, which is exactly why we model the redemption, the new loan, the deductions and the net cash released before you commit, so the numbers are clear from the start and you know what actually reaches your account. Where the pub has added an income line since the last loan, food covers or letting rooms, the higher EBITDA can lift both the value and the affordable loan, so the trade and the value are modelled together.

Rates and costs

Refinance rates track the wider pub term-loan market, indicatively from around 7 to 10 percent, set by the trade, the tie and tenure, the loan to value and the term, and quoted as a fixed rate or a margin over base or SONIA. The costs of moving include a new lender arrangement fee of around 1 to 2 percent, a going-concern valuation, legal fees, and crucially any early repayment charge on the existing facility, which can outweigh the saving if the current deal is recent. Exiting a bridge onto a term loan almost always saves money, because monthly bridging rates are far higher than term rates. The early repayment charge is the figure that most often decides whether a refinance makes sense: on a recent fixed-rate facility it can run to several percent of the balance and wipe out the rate saving, while on a variable facility near the end of its term it may be small or nil. Timing a refinance to follow the end of a fix, or to coincide with a maturity, often turns a marginal move into a clear one. We compare the all-in cost of refinancing against the cost of staying put over the remaining term, disclose our broker fee in writing, and never claim an exclusive tie to any lender, so the recommendation rests on the full numbers.

Refinance, a new acquisition loan or staying put

Refinance is the right product when you already own the pub and want to improve the debt: a lower rate, capital out, a cleaner structure, or an exit from a bridge. It is distinct from acquisition finance, which funds buying a pub you do not yet own, although the underwriting is similar. Sometimes the right answer is to stay put, when the current rate is keen and an early repayment charge would swallow the saving; we will tell you when that is the case. Exiting a bridge is the clearest win, because moving from monthly bridging rates to annual term rates cuts the cost sharply, and a pub that has built a trading record since it was bought on a bridge is exactly the case a term lender wants to see. We weigh moving against staying on the full numbers, including the early repayment position and the cost of the move, not just the headline rate.