From finance to freeholds: how to run a pub or bar

Starting and running a pub is a challenging mission. Despite many owners’ hopes of a relaxed, social, lifestyle business, the pub industry is highly competitive. What’s more, they’re often some of the first businesses to feel the impact of changes in the wider economy. This includes rising costs and changes in consumer spending when times are tight. Finance for pubs can be a valuable buffer against uncertainty, whether a short term business pub loan or other form of lending.

Here we’ll explore the options available and how to decide the right financial support can make a big difference for you and your customers to keep the pints flowing.

Finance options for pubs

Finance for pubs can come in handy in a range of scenarios, from covering gaps in cash flow to purchasing a new ice machine when the old one packs it in just before a sunny weekend.

Luckily, there are a range of options available, from pub loans for big purchases to invoice financing to keep working capital moving.

Managing cash flow with finance

When it comes to cash flow management, it’s not uncommon to have periods where money in and money out don’t quite align. This is especially common with seasonal hospitality businesses like pubs, which can experience major ups and downs in revenue.

Cash flow finance solutions tend to be focused on flexibility, speed and convenience. Let’s go through the most important ones.

Short Term Loans

A short term loan can be a convenient way to borrow money  for just the time you need it, looking at months, not years without getting tied into lengthy loan agreements. These can be secured or unsecured business loans, based on the amount and terms you’re looking for.

Online lenders – such as iwoca – are set up to help independent traders like publicans manage their cash-flow with a small business loan.

With an iwoca Flexi-Loan, you could borrow up to £500,000 for 24 months. Decisions are made within one working day, so we won't keep you waiting to hear if you've been approved.  We don't charge any early repayment fees either, meaning you can save on interest if you decide you don't need the money for the whole year.

Merchant cash advance

Ideally suited for restaurants and pubs, a merchant cash advance is a short-term funding option for businesses that get a lot of their sales through card terminals. Repayments are managed as a percentage of your card sales, automatically dedicated.

Business line of credit

If you’re not sure how much capital you need, a business line of credit enables you to borrow up to an agreed limit and only pay interest on the amount you use.

Business credit card 

Business credit cards effectively function as a short term credit facility on a month by month basis, though remember that interest rates and fees will be much higher than other kinds of pub finance. 

Commercial mortgage

If you’re looking to do a major upgrade to your pub premises or acquire a new a premises a commercial mortgage, secured against your property can provide access to large amounts of capital

Asset finance

If you've got premises or equipment but need to raise some funds, it may also be worth looking into asset finance. This is a type of secured loan when the value of an asset is used as security against borrowing.

Crowdfunding

Crowdfunding offers a way to raise funds with the support of your community and customers. By creating an eye-catching campaign on platforms like Kickstarter or Crowdcube, you can attract input from ordinary people who believe your mission. This not only provides the capital you need but also builds a loyal customer base excited to support your journey. 

Crowdfunding is ideal for pubs planning significant changes or new initiatives, such as opening a new branch or launching a unique service, and it also adds a personal touch to your financing strategy.

What finance should I get for my pub?

Choosing the right loan for your pub requires careful consideration of your financial needs, repayment capacity, and the specific terms of each financing option. 

• Start by assessing your cash flow projections and understanding how much capital you need and for what purpose. 
• Compare different financing options, focusing on interest rates, repayment terms, and flexibility. 
• The right loan should support your pub's growth and stability without overburdening your finances.

The right choice will depend on what you intend to use it for. Asset finance, for example, is ideal for, well, assets. Think new kitchen equipment, vehicles or furniture. Otherwise, if you need new inventory or cash flow coverage, a short term loan might be more appropriate. 

How to Apply for a Pub Loan

The application process for a pub loan or finance will depend on the option that suits your needs. On some occasions, the speed and ease of application may be the most important thing for your needs – say, if you have an urgent bill to pay or trouble making payroll.

When speed and flexibility matter, an iwoca Flexi-Loan has you covered. Our team can give you a decision in a day, with the funds in your account within a few hours once you’re approved. 

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