Pub refurbishment and fit-out finance
Funding for a trade refurbishment, a new kitchen, letting rooms, a cellar and bar fit-out or trade-area works, structured as a short-term facility or an additional advance against the pub.
What is pub refurbishment and fit-out finance?
Pub refurbishment finance funds the works that keep a pub competitive or unlock new income: a refresh of the trade areas, a new or upgraded kitchen to add a food offer, letting rooms in unused space upstairs, a cellar and bar fit-out, a beer garden or a covered outdoor area. It is finance to invest in a trading pub, lifting its condition and its turnover, rather than to buy or build one.
The works can be light or heavy. A light refresh of the bar and trade areas is often funded by an additional advance on the existing facility or a short bridging loan, because the pub keeps trading and the value uplift is modest. A heavier scheme, putting in a commercial kitchen to move a wet-led pub toward a food-led offer, or converting first-floor space into letting rooms, is larger and may need a short-term facility sized against the value once the works complete, then a refinance onto a term loan as the improved trade beds in.
Fit-out and equipment are a category of their own. Kitchen equipment, cellar cooling, bar servery, furniture and fixtures wear out and offers move on, so a pub faces periodic fit-out spend that a lender treats as capital expenditure against the business. This can be funded by an additional advance, an asset finance line secured on the equipment, or folded into a wider refurbishment facility, depending on the size and the pub's headroom.
As an illustration, and not an offer, take a wet-led freehold pub adding a commercial kitchen and a 60-cover dining area to capture food trade, at a works cost of around 140,000 pounds. Where the existing mortgage has headroom, a lender might fund this as an additional advance at term-loan rates, repaid from the uplift in food turnover. Where there is no headroom, a short-term facility sized against the higher going-concern value the kitchen creates funds the works, then refinances onto a larger term loan once the food trade is established.
We place refurbishment and fit-out finance across the bridging and term lenders and challenger banks that lend on the sector, including Shawbrook, OakNorth, Allica Bank and Cynergy Bank, and we structure the facility around how the works affect trade and value, so the cost matches the return the refurbishment is meant to deliver.
The reason refurbishment finance is its own product, rather than just a use of a term loan, is that the works change both the cash flow and the value of the pub while they are being done. Trade areas closed during the works do not earn, so turnover dips at the very moment capital is going out, and a lender has to be comfortable funding that gap as well as the works. On the other side, a well-judged refurbishment lifts the achievable turnover and margin once the pub reopens, raising EBITDA and the going-concern value, so the right facility is one that bridges the trading dip and is repaid out of the improved trade it creates.
- Funds trade refurbishment, kitchens, letting rooms and fit-out
- Light works via an additional advance or short bridging loan
- Heavy works via a short-term facility sized on post-works value
- Equipment and fit-out treated as capital expenditure against the business
- Aims to lift turnover, margin and going-concern value
- Placed with Shawbrook, OakNorth, Allica Bank and Cynergy Bank
Indicative terms
- Loan sizeFrom around 50,000 pounds upward, depending on the works
- Loan to valueLight works to current value LTV; heavy works against post-works value
- TermMonths for a bridge; folded into a term loan for larger works
- RateIndicatively around 0.75 to 1.30 percent a month on a bridge, or term-loan rates on an advance
- StructureAdditional advance, short-term facility, or asset finance for equipment
- DrawdownLump sum or staged against the works
- ExitRefinance onto a term loan as improved trade beds in
- SecurityFirst or further charge over the pub
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
Who it suits
- Operators adding a kitchen to move a wet-led pub toward food
- Owners converting first-floor space into letting rooms for accommodation income
- Pubs refreshing trade areas, the cellar, the bar or the beer garden
- Buyers funding a refurbishment alongside an acquisition
- Operators replacing kitchen, cellar or bar equipment on a capital cycle
Discuss pub refurbishment and fit-out finance
A view on fundability within one working day.
How refurbishment and fit-out finance works
Scope and impact
We scope the works and how they affect trade and value, then decide whether an additional advance, a bridging loan or a term facility fits best.
Terms and valuation
We secure terms from the lenders that fit and, on heavy works, instruct a valuation reporting on both current and post-works going-concern value.
Drawdown for the works
Funds are released as a lump sum or in stages against the refurbishment, keeping the pub trading where possible during the programme.
Exit onto a term loan
Once the works complete and the improved trade beds in, a short-term facility is refinanced onto a long-term term loan at a lower rate.
Who can borrow and what lenders look for
What a lender looks for depends on the size of the works. For a light refurbishment funded by an additional advance, they care that the existing facility has headroom and the pub's trade covers the slightly larger debt. For a heavier scheme such as a new kitchen or letting rooms, they underwrite the works themselves: a costed scope, a credible contractor, a sensible programme, and the value and trade uplift the works are meant to deliver. They want to understand how the pub keeps trading during the works, or how a closure period is funded if part of the pub has to shut. A scheme that adds a genuinely new income line, food covers or letting rooms, presents well because the lender can see how the spend pays for itself, whereas a cosmetic refresh with no clear return is a harder ask. They will also look at the borrower's track record of delivering works on budget, because a refurbishment that overruns ties up the trade longer, deepens the dip and erodes the very return that justified the spend. We structure the facility around the works and the cash flow, sequence the works so the pub keeps earning where it can, and evidence the return so the lender sees refurbishment as investment rather than cost.
How much you can borrow
On light works funded by an additional advance, the amount is governed by the headroom in the existing loan to value and the pub's ability to service the larger debt. On heavy works funded by a short-term facility, lenders size against the going-concern value once the works are complete, advancing a share of that improved value and releasing the funds in stages, much like a small development facility. Equipment and fit-out can be funded as part of that facility, on an asset finance line secured on the kitchen, cellar or bar plant, or as a further advance, with the amount tied to the cost and the pub's headroom. Because the right works lift turnover and margin, they can increase the pub's going-concern value and therefore its borrowing capacity once the trade beds in, which is what makes a refinance onto a term loan after the works the natural exit. The clearest example is food: putting a commercial kitchen into a wet-led pub can add a substantial new income line, and that flows through EBITDA into the going-concern value the eventual term loan is sized against, so the works can pay for themselves in the structure rather than simply adding debt. We work back from that improved value to set the right facility size, fund the trading dip while the works run, and size the exit term loan on the post-works EBITDA.
Rates and costs
Cost follows structure. An additional advance on the existing pub facility is priced at term-loan rates, indicatively from around 7 to 10 percent, the cheapest way to fund a refurbishment where there is headroom. A short-term refurbishment bridge, taken specifically to fund the works, is priced per month, indicatively around 0.75 to 1.30 percent, because it is fast and temporary, and is meant to be refinanced once the works complete. Equipment funded on asset finance carries its own rate over the life of the kit. Expect a lender arrangement fee of around 1 to 2 percent, a valuation where heavy works are involved, legal fees, and on a bridge any exit fee. The structure decision is really a cost decision: where the existing facility has headroom, an additional advance at term-loan rates is far cheaper than a bridge, but where there is no headroom, a short bridge at a monthly rate may be the only way to fund the works quickly, accepted on the basis that it is refinanced as soon as the improved trade beds in. Spreading the equipment over an asset finance line keeps it off the property facility and matches the repayment to the useful life of the kit. We disclose our broker fee in writing, compare structures on total cost over the life of the works and the recovery, and never claim an exclusive tie to any lender.
Refurbishment finance, bridging or development finance
Pub refurbishment finance is the right product when an existing, trading pub needs investment to stay competitive or to add an income line, short of building, extending or changing the use of the property. Light works lean toward an additional advance on the pub term loan or a short bridging loan; heavy works such as a kitchen or letting rooms sit closer to a small development facility, sized on the pub's post-works going-concern value and refinanced afterwards. If the project is a genuine build, extension or change of use, pub development and conversion finance is the better structure. If you need to buy a tired pub quickly before refurbishing it, bridging funds the purchase and the works can follow, with the refurbishment facility and the eventual term loan planned alongside the bridge so the whole sequence is mapped from the start. What matters is matching the cost and the term of the money to the works it funds, so a quick refresh is not carrying long-term debt and a major reconfiguration is not stretched over a term advance it was never sized for.
Pub refurbishment and fit-out finance: common questions
How do I finance a pub refurbishment?
Light works are usually funded by an additional advance on the existing term loan or a short bridging loan, while a heavier scheme such as a kitchen or letting rooms is funded by a short-term facility sized on the going-concern value once the works complete, then refinanced onto a term loan. We match the structure to the scale of the works and the pub's headroom.
Can I finance putting a kitchen into a wet-led pub?
Yes, and it is one of the most common pub refurbishment cases, because adding food covers creates a new income line. Where the existing mortgage has headroom, a kitchen is often funded by an additional advance at term-loan rates; where it does not, a short-term facility sized on the higher going-concern value the kitchen creates funds the works and then refinances onto a larger term loan.
Can I fund letting rooms above a pub?
Yes. Converting unused first-floor space into letting rooms adds accommodation income, which lenders like because it diversifies the trade away from drink alone. The works are funded as a refurbishment or light development facility, sized on the going-concern value the rooms help create, and the improved trade supports a refinance onto a term loan once the rooms are letting.
Can I finance pub kitchen and cellar equipment?
Yes. Kitchen, cellar cooling and bar equipment can be funded on an asset finance line secured on the kit itself, as a further advance, or folded into a wider refurbishment facility, depending on the size and the pub's headroom. Asset finance keeps the equipment cost off the property loan and matches the repayment to the life of the equipment.
Can a refurbishment increase how much I can borrow?
Yes. A well-judged refurbishment, especially one that adds food or letting rooms, lifts the pub's turnover, margin and going-concern value, which raises its borrowing capacity once the improved trade beds in. That uplift is what makes a refinance onto a larger or cheaper term loan after the works a natural exit.
Discuss pub refurbishment and fit-out finance
Send us your scheme and we will come back with a view on fundability and likely terms within one working day.