Why hospitality is specialist security
A pub or hotel's value depends heavily on the business run from it. Valuers usually give a trading value, based on the earnings the business can sustain, and a vacant possession value, which can be much lower if the business closes. Many bridging lenders exclude pubs, bars, nightclubs and hotels for this reason, and others lend only against the vacant possession value.
On our panel, a few lenders state that they consider hospitality, pubs and hotels, or trading-business property generally, and some set lower loan to value limits for hospitality than for other commercial property, particularly on larger values.
Common situations
Bridging suits hospitality cases where speed or circumstances make a term loan impractical: a purchase at auction or from an administrator, a business that needs time to recover after a difficult period, a new operator taking over a closed pub, or a buyer who needs to complete before a specialist lender finishes its checks.
Some buyers plan to convert a pub or hotel to homes. Pubs are a sui generis use and conversion normally needs planning permission, and some pubs are listed as assets of community value, which gives the community a chance to bid before a sale. Lenders will look at the value with and without planning, and the plan to secure it.
What lenders look for
A strong application usually includes recent trading accounts and current figures, details of the premises licence, your experience or the experience of the operator, the condition of the building and any works needed, and a clear exit with supporting evidence.
The exit is often a commercial mortgage from a lender that specialises in hospitality, based on trading, or a sale of the business and property. For conversions, it may be development or refurbishment finance once planning is granted, or a sale with planning.
Arranging hospitality bridging
We compare lenders that consider pubs, hotels and trading property on valuation basis, loan to value and exit, then approach those that fit with a clear case. Instant Quotes lets you flag a pub, bar or nightclub, as a starting point. Final terms depend on each lender's valuation and checks.
If you or your family will live in part of the property, such as accommodation above a pub, the loan may be regulated depending on how much of the property is used as a home. We will tell you at the outset if that applies and how your case will be handled. Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
