Financing a pub purchase: how lenders value the building, the licence and the gaming

If you’re weighing up a pub, the first thing to know is that the lender isn’t looking at one asset. They’re looking at a building (or a lease), a liquor licence, possibly a bank of gaming machines, and a trading business that runs through the bar, the bistro and the function room. Each piece is valued its own way, and the price you agree has to make sense against all of them.

How do lenders value a pub?

Lenders split the price into two buckets.

The property. If you’re buying the freehold, the land and building get a property valuation. That’s the part a lender can take a mortgage over and sell if things go wrong, so it carries the most comfort.

The going concern. This is the business itself: the licence, the goodwill, the plant and the profit it produces. Valuers typically work from trading profit and adjust for the owner’s wages, which is why “what does a manager cost?” turns up in almost every pub valuation. A big chunk of a pub’s price can be going-concern value, and lenders are more cautious here because it only exists while the pub keeps trading.

Large pub deals in 2026 give a feel for how much weight the market puts on trading. Commentary on recent sales shows freehold going-concern deals dominating, with large groups and private investors buying in NSW and south-east Queensland. CBRE’s Australian pubs report is one place to see how the market is pricing them. Local country pubs trade at very different levels, so use these headlines as context, not as your price.

Freehold or leasehold: how does the loan change?

	Freehold going concern	Leasehold
What the lender holds	A mortgage over the building plus the business	Charges over the licence and business, often plus other property
Deposit	Usually lower	Usually higher
Key question	Is the property value solid?	How many years are left on the lease, and are there options?
Main risk	Overpaying for the going concern	Lease ending or rent jumping

One broker guide puts the ceiling at roughly 65% of price for a freehold with gaming, about 50% for a freehold without gaming, and about 50% of going-concern value for a leasehold with gaming. Those are indicative numbers from one source, not a rule, but the pattern is consistent: more bricks, more borrowing.

If the lease has less than ten years to run, many lenders will want it extended before they commit. Ask the landlord early.

What do lenders do with gaming income and entitlements?

Gaming is the part that surprises first-time pub buyers, because the machines don’t always come with the pub in the way you’d expect.

In NSW, hotels must generally source gaming machine entitlements from the existing pool held by other hotels, and transfers go through the state’s entitlements and permits process. When the liquor licence being transferred includes entitlements, the buyer also has to provide a direct debit form and monitoring forms showing nothing is owing.

In Victoria, the VGCCC wants approval before settlement and at least 14 working days’ notice of the settlement date. The entitlement transfer is only final once it’s on the Entitlement Transfer Market Register, and the regulator warns that late notification could mean the venue is operating illegally.

From the lender’s side, that means three questions:

1. How many entitlements are actually transferring, and are they approved?
2. What’s the net gaming revenue after duties, and what’s its trend?
3. What happens to repayments if the entitlements are delayed or cut?

Show gaming, bar, food and accommodation income separately. A pub whose profit depends on gaming reads differently from one with a strong bistro and function trade.

What does the liquor licence have to do with the loan?

A lender wants the licence current, in good order and transferable. In NSW, the transfer process lets a business keep operating while the application is assessed. Provisional approval is usually given within about ten business days of a complete application, with confirmation around 60 days later if there are no objections.

The practical point for your contract: make settlement conditional on the licence and any gaming transfers, and put the finance date after them. Our licences guide covers what lenders check across industries.

A worked example

This is an illustration only. Say a regional freehold pub is offered at $3.2m: $1.9m for land and building and $1.3m for the going concern, with 15 gaming entitlements included.

• The lender values the property at $1.9m and the business on its trading profit.
• Because the going-concern part rests on trading, the lender will often lend less against that $1.3m than against the bricks.
• The buyer covers the gap with a cash deposit, and perhaps equity in other property.
• The contract is conditional on the licence and entitlements transferring, with finance and settlement dates after those.

The lesson: the deposit gap is usually in the business half, not the building half.

What do lenders want in the file?

• Three years of financials and the latest management accounts, with gaming, bar, food and accommodation split.
• Benchmarks. Wages and cost of sales sitting outside the ATO’s pub benchmarks will draw questions.
• The lease and any options, or the title.
• Your own experience, or the manager you’ll put in.
• A plan for the first year: refits, staffing and how you’ll protect the seller’s regulars.

If you’re new to the industry, our guide to buying a business with no industry experience sets out how to present that.

What mistakes cost pub buyers the most?

Treating the licence as a formality. The licence and entitlement transfers have their own regulators, forms and timelines. If your finance approval expires before they’re done, you can end up scrambling for an extension. Line the dates up in the contract.

Pricing the business on the seller’s best year. Lenders look back across three years and the latest months. If gaming or bar takings have slipped, expect the lender’s valuer to use the lower trend, not the peak.

Forgetting the working capital. Stock, wages and the first quarter’s bills hit before the new takings settle. A pub that’s bought with every dollar tied up in the price has no buffer for a quiet winter. Lenders notice, and it’s cheaper to plan a small line of credit or cash reserve at the start than to chase one later.

Skipping the refit budget. Many buyers plan to lift takings with a refit, a beer garden or a kitchen upgrade. If that spend isn’t in the plan, the lender is funding a pub that can’t deliver your projections. Our pub business loan page covers refit funding once you own the venue.

Ignoring who is staying. A long-serving licensee, chef or gaming manager can be worth a lot to a venue. Lenders like to know who’s staying after settlement and who you plan to put in charge.

How should you line up the steps?

1. Get the seller’s financials, lease or title, licence details and entitlement schedule.
2. Get a feel for the likely deposit and structure before you make an offer, not after.
3. Make the contract conditional on finance, the licence transfer and any gaming approvals.
4. Book the valuation and check the building, council zoning and any planned changes if you’re buying freehold.
5. Notify the regulators early. Victoria, for example, wants at least 14 working days’ notice of settlement.
6. Keep a working-capital buffer for the first few months.

business.gov.au’s buying guide is a handy checklist for the general due diligence side.

Where do we come in?

Our property-secured loans run from $20k to $5m, and unsecured and cash-flow options typically from $5k to $500k, sized on turnover and bank statements. That suits smaller and regional pubs, a deposit or top-up layer when you’ve got equity elsewhere, and the refit afterwards. Bigger metro hotels are usually a big-bank or specialist job.

If your numbers are in front of you, tell us about the pub you’re looking at and we’ll tell you honestly what fits. You can also compare business acquisition loans and commercial property loans first.

Ready to see what’s possible?

Buying a pub is a big decision, and it’s easier when someone who understands how lenders read these deals looks at it with you before you sign. Our enquiry takes about 60 seconds, and your credit file isn’t touched just for asking. We don’t send your details to a pile of lenders, so your phone won’t ring with strangers. A real person reads your situation and calls you. The more accurately you fill in the form, the better the first match.

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