Many of our clients in the pub, restaurant and hospitality sectors often find it harder to secure commercial finance than those in other sectors. Seasonal trading, tight margins and fluctuating accounts can obscure the full picture of a business’s potential and attractiveness as a borrower. For these businesses, finance isn’t out of reach, but it usually requires a different approach.
Why hospitality businesses can be harder to fund
Hospitality is a tough sector, with rising costs putting real pressure on operators. According to the British Beer and Pub Association, 161 pubs closed in the first three months of 2026, almost two a day and 26% more than the same period last year. More widely, hospitality insolvencies remain high, with 1,602 accommodation and food service businesses, including pubs, entering insolvency in the first half of 2026.
With that many businesses failing, it’s no surprise lenders are cautious. Many apply tighter criteria to a pub, restaurant or hotel than they would to a business in another sector. The challenge for a well-run business is being assessed on its own merits, not the sector’s track record.
When deciding whether to lend, lenders scrutinise trading accounts, and hospitality businesses often raise a few red flags. For example, a pub that’s had a difficult year, a restaurant still building up trade, or a seasonal business with a quiet off-season can all look riskier on paper than they are.
Lenders often value licensed and leisure properties differently from other commercial property, using trade valuations based on turnover and profitability rather than bricks and mortar alone. Not every lender is equipped to assess them accurately. Pubs can also be tied to a particular brewery or operator, which affects both the valuation and who’s willing to lend against them. Add in seasonal trading patterns and accounts that don’t always tell the full story, and it’s easy to see why some lenders are cautious before they’ve even looked at the detail.
Common hospitality finance needs
The most common reasons our hospitality clients seek finance are:
1. Purchasing a freehold pub, restaurant or hotel
Buying the property your business trades from, rather than leasing it, provides long-term security and control. Lenders will want to understand the trading history and the operator’s plan going forward.
2. Capital raising against an existing freehold
Many hospitality businesses use the equity in their property to clear other debt, fund refurbishment, or free up cash for the next stage of growth.
3. Funding refurbishment or expansion
Expanding or updating existing facilities is a common requirement for hospitality businesses. Lenders will need to see a credible plan for how the investment will pay off.
4. Clearing short-term or family borrowing
Hospitality businesses are often funded informally in the early years through family loans or short-term finance. Refinancing onto a proper commercial facility can put the business on a more sustainable footing.
What makes the difference
Hospitality deals tend to succeed when the lender understands the sector, rather than applying a generic checklist used for any other business. That means looking beyond a single difficult trading year to the reasons behind it, understanding seasonal cash flow rather than penalising it, and recognising the value of a well-run freehold business even when the accounts alone don’t tell the full story. Finding the right lender and knowing how to tell your story are key.
We recently helped hospitality clients purchase a closed pub with no operator experience, refinance to save their B&B from closure at the last minute, and secure an unsecured loan to fund significant expansion plans. Each required a lender willing to look at the whole picture, not just the numbers on the page.
Thinking about finance for your pub or hospitality business?
If you’re looking to buy a freehold, raise capital, or fund growth, contact your local ASC office to talk through your options. You can also browse our full portfolio of hospitality success stories here.
