Looking to buy a leasehold on a pub worth 50k, how much would a bank be willing to loan me of that 50k?

Question

I only have about 5k to put to the 50k so im not sure if a bank would loan me such a high percentage of what i need. My credit rating is not bad but not great either and im not a homeowner so they might see me as high risk, should i still seek a banks advice or would they just laugh at me? Please help me with any advice.

Answer 1

Commercial loans are made on a totally different basis to residential loans. The bank will be looking mainly at the viability of the business and your plans for it. Your experience of running businesses in general and pubs in particular will be relevant, but not critical either way.



When you buy any business it is normal to see the accounts beforehand. If they show that it turns a huge profit then a loan will be much easier to get. And if its been running at a loss for 5 years even Richard Branson might struggle to get a loan.



50k is very low for a leasehold on a pub, which I assume includes the "business" and all the fixtures and fittings etc. So I would guess that it is either not a viable business, or the leasehold is very short term and expires soon, with no guarantee of renewal.

Answer 2

Sorry it won't work. You need at least 20% of the asking price and a good track record in business. You have no equity for the Bank to fall back on and pubs are closing in the UK every day. I have owned 3 business's and had a bank loan and their checks are very stringent. You also need a very clean credit rating.

Answer 3

Hi, I don't think it could hurt to talk to your bank? You can explain the situation and see what they think. They'd probably need to set up a professional business account for you. There are other options too, like seeking loan companies out.

Answer 4

Banks will only lend out 70%...therefore you will need 15k before they will even look at your loan application. Even then, with not great credit and no hard assets...you would still be seen as a huge risk.

Answer 5

Depends on who owns the pub. If the bank reckons the pub owner is OK and the pub owner thinks you're OK then you're in with better than 'evens' chance to get the money you want!



Best of luck!

Answer 6

Where can you get a pub that cheaply?

With the rate of pub closures, I doubt that anyone would lend you anything, also, have you had any experience in running a pub?

Answer 7

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Answer 8

They'd loan you $5,000 -- after you deposit the $5,000 into a bank account in their bank and allow them a "right-of-offset". Oh yeah, the deposit can't be touched.