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Finding the best loans for pubs generally focuses on cash flow and potential renovation or equipment costs. The pub industry in the UK is huge, with roughly 40,000 pubs serving about £18.3 billion of food and drink in 2023-4, forming a vital part of the UK’s hospitality industry, which employs around 2.7 million people in the UK.
Yet it faces serious challenges. Rising costs and cautious spending have seen around 34 pubs close each month in 2024. Given these tight margins, pub owners often need financing to cover cash flow gaps or fund growth. The good news is that there are many specialist lending options for pubs. Below, we explain the main ones and how they work.
Key takeaways
- UK pubs generate massive turnover (almost £15 bn in 2021) but closures have been accelerating (over 400 pubs lost in 2024).
- A variety of loan types can cover pubs’ needs, from buying stock and paying suppliers to renovations and expansions. Specialised products (for example, a pub purchase loan with no payments for the first year) are available.
- Government-backed schemes help too: the start-up loan for new businesses (up to £25k), and the new Growth Guarantee Scheme (launched July 2024) which backs loans up to £2 million.
Working capital loans help pubs bridge quiet periods by covering operating costs and stock purchases. A lump sum from a cashflow loan can hit a pub’s account within days, keeping taps flowing and supplies stocked. These short-term funds ensure the pub stays open even during seasonal lulls.
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Best loans for pubs
Finding the best loan for your pub can be a tricky task, as it might not be entirely clear which is the best loan to go for.
At Rise Funding, we are loan specialists who can help fight your corner and ensure that you get the best type of loan possible for your situation, and understand everything you need to know about the loan process.
Here are eight loan options for your pub that you might want to consider.
1. Merchant cash advance
A merchant cash advance (MCA) is a popular cashflow solution for pubs. With an MCA, the lender gives the pub a lump sum up front, and the loan is repaid via a percentage of the pub’s card takings. This means you pay back more when trade is good and less when it’s slow. MCAs usually require no additional security, since the card receipts themselves guarantee the loan. Pubs with high card turnover can often borrow larger sums under an MCA.
2. Government-backed loans
Government-backed schemes can make pub borrowing easier. For new pub businesses, the UK Start Up Loan (up to £25,000) offers affordable terms and can be easier to qualify for. For established pubs, the Recovery Loan Scheme (now replaced by the Growth Guarantee Scheme) provides guarantees to lenders. The Growth Guarantee Scheme (launched July 2024) supports loans up to £2 million with a 70% government guarantee. In other words, lenders are more willing to lend large amounts for capital investment or working capital if the government backs most of it. Pubs can use these loans for any legitimate business need, from cashflow to renovations.
Pub owners should also build a strong application: detailed cashflow forecasts and budgets help lenders feel confident. With the right preparation, loans can keep a pub running or even help it grow.
3. Term loan
A term loan is a standard business loan that provides a fixed lump sum which you repay, with interest, over a set period. Term loans for pubs can be unsecured or secured against business assets. These loans are suitable for one-off expenses – for example, buying equipment, refurbishing the bar, or consolidating existing debts. You’ll agree to a regular repayment schedule (e.g. monthly) and a total term (often 1–5 years, sometimes longer).
4. Business credit card
A business credit card is similar to a personal credit card but used for pub expenses. It offers a revolving credit limit that can finance purchases up to the limit. Credit cards are usually unsecured, but their interest rates and fees tend to be higher than for loans. They can be useful for short-term needs (e.g. emergency supplies), but using a card long-term can become expensive.
5. Commercial mortgage
Commercial mortgages (also known as property loans) allow a pub to borrow a large sum secured on the building itself. For example, you might use a commercial mortgage to buy a pub’s freehold, or to take equity out of a pub you already own.
These loans typically have long terms (up to 25 years) and higher borrowing amounts. However, lenders usually require a substantial deposit – often at least 25% of the purchase price. Commercial mortgages are suitable for pub owners who own or are buying the property where their business operates.
6. Franchise funding
Many pubs operate under franchise or branded licence agreements. Buying into a pub franchise often requires hefty upfront costs. Major pub groups typically require a minimum investment (for example, entry to some chains can start around £25,000, and much more when fixtures are included). Some franchisors offer dedicated financing to cover initial fees, but often franchisees combine loans to raise capital. For instance, a pub owner might use an asset finance loan for equipment and a term loan to pay the franchise fee. In practice, franchise funding usually means piecing together multiple loans to cover the total cost.
7. Peer-to-peer lending
Peer-to-peer (P2P) lending links businesses with individual lenders via online platforms. Unlike crowdfunding, P2P lending is structured as a loan: you receive a lump sum and repay it with interest over time. Rates and terms are agreed per loan, and P2P can sometimes fill the gap when banks decline. It often requires a creditworthy business and/or personal guarantee. For pubs unable to get traditional finance, P2P may be an option, though expect the interest rate to reflect the higher risk.
8. Crowdfunding
While not technically a loan, crowdfunding allows a pub owner to raise money online from many individuals – usually as a gift, reward, or equity. The funds do not have to be repaid, provided they’re used as promised. Successful crowdfunding typically requires a compelling story (for example, reviving a beloved village pub or expanding a community brewery) and a broad network or marketing campaign. Because crowdfunding is gift or investment-based, a pub could potentially raise more than its target. However, there’s no guarantee: many campaigns fail to reach their goals.
Finding the best loan for your pub
Overall, the best loan for a pub depends on the goal. Cashflow gaps might be best covered by a merchant cash advance or line of credit. Buying or renovating a pub is often handled via a commercial mortgage. Specialised lenders can tailor packages (e.g. funding a new pub purchase with a payment holiday).
At Rise Funding, our brokers specialise in hospitality. We work quickly to find finance (often in as little as 24 hours) for seasonal businesses like pubs. Whether you need a quick cash injection or a term loan for expansion, we can assess options across multiple lenders.
Check our Cashflow funding guide and Business loans page for more on how these finance types work for pubs, or get a free quote to see what’s available.
