May 23, 2026 Hospitality & Accommodation

How Pub and Bar Owners Approach a Commercial Mortgage

Buying the freehold of the pub or bar you run brings the building, the trade and the liquor licence together as an asset you own. At Ardent Capital Group we speak with pub and bar owners about this kind of commercial property purchase, so this guide sets out how a lender reads a freehold pub and what moves the number.

Ardent Capital Group is a specialist in commercial mortgages for pub and bar operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.

Funding capacity: We arrange commercial mortgages from $100,000 to $10,000,000+ for freehold and going concern purchases.
Proven track record: Over $500,000,000 facilitated across more than a decade for 1,000+ Australian borrowers.
National coverage: Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
Sector fluency: Hospitality, venues with gaming, small bars, gastropubs, live music and mixed-use pub freeholds.

Our brokers work the full lender panel for a pub property loan, not a single bank.

Why pub and bar owners choose to buy

Fit-outs are capital heavy and site specific. A full commercial kitchen, cool rooms, glycol and beer reticulation, stainless and exhaust, acoustic treatment, bathrooms and access compliance, AV and lighting, external signage and beer garden works commonly reach $400,000 to $1,500,000+. That investment is hard to move, and your patron base is tied to the address, trading hours and licence.

Owning the freehold stabilises occupancy costs, reduces exposure to rent reviews, and aligns repayments with equity growth. For operators with resilient revenue mixes across bar, bistro, functions, gaming and bottleshop, the building becomes a balance-sheet asset while the business continues to produce cash flow.

Main drivers for ownership:

Control of the site: Certainty on tenure, layout changes and trading hours within local planning and licensing rules.
Protect the fit-out spend: Keep the value you build in plant, acoustic works and customer areas tied to your own freehold.
Repayments build equity: Each payment reduces debt on an owned asset, not another landlord's return.
Better alignment with operations: Renovation timelines and capex decisions are cleaner when you are the landlord.

When buying may not suit:

A short remaining lease at your current venue with a likely relocation on the horizon.
A plan to scale into a larger site or different catchment that could make today's purchase a poor fit.
Capital required in the business for staff, menu change, marketing, compliance or debt clean up that would deliver higher return than a deposit.
Limited trading history, unstable cash flow or a building with major capex risk. The decision sits with you.

How lenders approach a pub and bar purchase

Deposit and LVR. A freehold going concern pub is usually funded to between 50 and 65 per cent of value, which implies a deposit of 35 to 45 per cent. A leasehold going concern, where you buy the business and licence but not the building, sits lower again, often 40 to 50 per cent, with the loan term capped by the remaining lease. In some structures 100 per cent of the purchase can be funded by adding cross-collateralised security over other property you own, and our broker team can explain how. Stronger trade and experienced operators access the higher end of the freehold range.

Loan term and structure. Hospitality property terms commonly run to about 15 years, shorter than the 25 to 30 years a standard commercial or residential borrower expects. Repayments can be principal and interest for steady debt reduction, or interest only for a period, usually up to about 5 years, where cash flow preservation is the priority, such as during a renovation or rebrand.

Security and serviceability. The property is the primary security. Lenders assess business financials and serviceability using EBITDA, addbacks, seasonal patterns, POS and merchant data, and the shift from rent to mortgage. Directors' guarantees and secondary security may be requested where the loan to value ratio is higher or cash flow is variable.

Owner occupier treatment. Lenders typically view owner occupier pubs and bars more favourably than pure investment holdings because the operator controls the trade and the upkeep, and can prioritise occupancy costs.

Ownership structures a lender sees

Many pub and bar operators hold the freehold in a separate entity, such as a company or unit trust, and lease the premises to the trading business on a commercial lease at market rent. A lender then reads the inter-entity rent as one serviceability line and the trading profit as another, which can clarify cash flow and define lender appetite. This is a common arrangement operators already use, and the finance is structured around it rather than the other way round.

Where an operator holds the premises through an SMSF, the lending works differently:

Commercial premises generally qualify as business real property, so an SMSF can acquire the pub freehold and lease it back to the trading business at an arm's length market rent, set and supported by an independent valuation.
Borrowing inside super runs through a limited recourse borrowing arrangement with a bare (custodian) trust, an LVR typically in the 65 to 75 per cent range for a specialised asset such as a pub, personal guarantees and a liquidity buffer.
The loan cannot be cross-collateralised against other property, so the fund needs its own deposit, and it funds the freehold as a single asset, meaning the business, fit-out, plant and licence value are financed separately, outside the fund.

Ardent Capital Group arranges the mortgage against whichever entity holds the pub's freehold, whether that is a trading trust, a holding company or an SMSF leasing the venue back to your trading business, while your accountant or SMSF specialist confirms the tax, super and ownership position before anything is signed.

The lender's checklist

Business financials and track record: Two to three years of financials, BAS, POS and merchant summaries, seasonality across weekdays, weekends, sport finals and holiday periods.
Serviceability and cash flow: EBITDA, addbacks, interest coverage, the switch from rent to mortgage, labour and cost of goods stability, and any non-recurring items.
Property and valuation: Going concern value on trade, alternative use, zoning, heritage or building compliance, condition and capex plan, with the liquor licence and any gaming entitlements captured inside the value.
Deposit and equity position: Cash savings, proceeds from a sale, or the ability to leverage your equity in other property to top up the deposit.
Lease and occupancy: If a holding entity leases to the trading company, lenders assess lease terms, rent level, and assignment rights. If the site is partly tenanted, they assess tenant quality and WALE.
Licensing and compliance: Liquor licence status, gaming entitlements where relevant, council permits, fire safety and noise controls.

A specialist broker matters in this sector because the assessment is a blend of property risk and hospitality cash flow, and the right presentation changes the outcome.

One way this can play out

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Profile: Owner-operator of a 180-seat pub in Melbourne's inner north, strong bistro and weekend trade, 7-day liquor licence, limited gaming. Current lease has 8 years to run with options.
Goal: Buy the current freehold if the landlord sells, or secure a comparable freehold nearby to remove lease risk within 12 months.
Funding options mapped:
- 60 per cent LVR with a major bank on an owner occupier basis, 15-year principal and interest term, using business cash flow plus rent replacement to meet serviceability.
- 65 per cent LVR with a non-bank at a higher rate, interest only for 2 years during a planned kitchen upgrade, then a switch to principal and interest once the renovation settles.
- A higher-gearing option combining the commercial mortgage with a second facility secured against the owner's home and an investment property, with the cross-collateralisation released as debt reduces.
Structures considered: Unit trust to hold the freehold and lease to the trading company at market rent, and a limited SMSF option for a smaller freehold with a clean tenant profile.
Working capital overlay: Separate $300,000 fit-out facility and a $200,000 overdraft to smooth payroll and inventory swings.
How we would approach it: We would map the ranges, structures and repayments for each path, weighing control of the site against cash flow headroom. The figures above are illustrative, not confirmed outcomes, and the decision would stay with the operator.

Other finance we arrange for pub and bar operators

Asset finance for venue equipment: Ovens, grills, refrigeration, keg systems, glycol chillers, glasswashers, coffee machines, POS, security and AV for sport and live music, arranged as pub kitchen equipment finance.
Fit-out and refurbishment finance: Bathrooms and accessibility, acoustic treatment, booth seating, bar refacing, beer garden upgrades, signage and lighting.
Working capital loans: Seasonal stock for peak periods, event-led purchasing for long weekends and finals, and supplier prepayments, funded through working capital for a pub.
Business overdraft: Weekly payroll, excise timing, and supplier terms managed without strain on cash reserves.
Refinancing and debt consolidation: Replace high-cost merchant advances, restructure ATO arrangements, and simplify multiple facilities into one plan.
Construction and renovation: Kitchen expansion, new function room, roof deck or outdoor area works, fire and compliance upgrades.
Business or premises acquisition finance: Freehold going concern purchases, buying out a partner, or stepping into a second venue.

These facilities can work together. Owning the premises can free equity for future upgrades, and a refinance can consolidate legacy debt to support clearer cash flow.

Talk to a pub and bar finance specialist

Ardent Capital Group arranges and structures commercial mortgages for pubs and bars, aligned to how you plan to hold and occupy the property. We map entity structure, lease mechanics and cash flow so the finance supports your venue and your long-term plan.

We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. We have helped facilitate over $500,000,000 in funding over a decade for over 1,000 borrowers. If you are weighing up a pub or bar purchase, we would be glad to talk it through and target optimal financial outcomes.

Questions we're often asked

What deposit do I need to buy a pub freehold as an owner occupier? Most lenders sit between 35 and 45 per cent deposit based on a 50 to 65 per cent going concern LVR, with the exact figure shaped by trading strength, valuation and property risk.

Can my SMSF buy my pub premises and lease it to my trading company? Yes, commercial premises generally meet the business real property test and can be held in an SMSF with a market rent lease to your trading entity, subject to limited recourse borrowing rules, lower LVRs and documentation requirements.

Will lenders include gaming revenue and late-night trade in serviceability? They will assess all recurring venue income, then apply sensible haircuts for volatility, regulatory risk and hours, with weight given to stable weekday and food revenue.

Do valuations include my fit-out and goodwill? A specialist hospitality valuer assesses the venue on its trade and EBITDA, with the liquor licence and any gaming entitlements captured inside the going concern value, while much of the fit-out is discounted below its cost, so do not expect the full fit-out spend to lift bank value dollar for dollar.

How do brewery supply or tap contracts affect finance? Lenders review the terms, any rebates, and whether there are security interests or assignments that affect cash flow or the property, and they will want visibility on expiry and renewal.

How fast can I move if the vendor runs an EOI campaign? With current financials, POS data, a valuation slot and titles ready, conditional terms can be arranged quickly, and we prioritise pre-work so you can commit within the campaign timetable.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.