Pub and bar loans for refits, stock and buying a pub

• The unit. Rent deposit, any lease premium and legal costs.
• The conversion. Bar, seating, toilets and decoration, usually through fit-out finance or a start-up business loan.
• Cellar and dispense. Cooling, stillage, glass washer and EPOS, which suit asset finance secured on the kit.
• Opening stock and the first months. Your own funds or stock finance, plus a buffer for the months before word of mouth builds.

Lenders usually want to see the licence, or at least the application and any conditions proposed, because a bar that cannot sell alcohol cannot repay. GOV.UK's guidance on alcohol licensing in England and Wales says premises selling alcohol on a permanent basis need a premises licence from the licensing authority, usually the local council, and must have a designated premises supervisor who holds a personal licence. Check with the council that the unit can be used as a bar before you sign a lease, and build the licensing timetable into when you need the money.

Illustration only, with round figures and no rates. A former shop unit on a five year lease needs £90,000 to open. The owner puts in £30,000 of savings for the rent deposit, licence costs and opening stock. Cooling, dispense and EPOS worth £25,000 go on asset finance, and £35,000 of fit-out goes on an unsecured start-up loan with a personal guarantee. Once the bar has a record of card takings, a merchant cash advance may become an option for the next refit. Our guide on how to buy, fund and open a pub covers the wider process, and Instant Quotes shows which lenders on our panel may suit, with no credit search.

Tables and chairs on the highway outside your pub need permission. In England, the government's pavement licences guidance says pubs, bars and other food and drink businesses can apply to the local authority for a licence covering items such as seating, tables and counters for serving food or drink. Licences can last up to two years, and a licence that is granted, or treated as granted, also brings deemed planning permission for what it covers. Budget for renewing it, and check the council's conditions before buying furniture to fit the space.

Illustration only, with round figures and no rates. A town pub spends £45,000 on its garden. A £20,000 canopy and heaters go on asset finance, and £25,000 of decking, lighting and furniture on an unsecured loan. The works start in early spring so the garden trades from the first warm weekend, and the owner checks the lease first to see who is responsible for external works. Tied tenants should also ask whether the pub company will contribute.

A common approach is a short facility that clears from the December takings.

• Revolving credit. A revolving credit facility drawn in November and repaid by the end of January.
• Stock finance. Stock finance pays the brewery or wholesaler directly, so cash in the till stays free for wages.
• A merchant cash advance. Repaid from card sales, so repayments ease in the quiet weeks of January. The merchant cash advance calculator shows how the share of takings works.

Remember that the quarter's VAT on that December trade still has to be paid, and a VAT loan can spread it. Our case study on two facilities for a gastro pub shows stock and kitchen funding arranged for one pub, and Instant Quotes shows which lenders on our panel may suit, with no credit search.

An unsecured loan gives you a lump sum repaid in fixed monthly instalments, with no charge over property. It is often the quickest form of term funding. Lenders usually ask for a personal guarantee from directors or owners, which makes you personally liable if the business cannot repay.

Most pub and bar takings are now by card, which makes a merchant cash advance a popular option. You receive an advance based on your average card sales and repay it through an agreed percentage of future card transactions. In a quieter month you repay less, and cash takings are unaffected. The flexibility comes at a cost, so compare the total repayable with a term loan.

This works like an overdraft: you have an agreed limit and can draw and repay as often as you need. Some facilities are interest-only for a period; others require capital and interest on what you have drawn. It suits seasonal stock purchases and short-term gaps.

Asset finance spreads the cost of equipment and vehicles. With hire purchase you own the asset once the final payment is made; with lease purchase there is usually a final balloon payment to take ownership. VAT can often be paid upfront or spread, depending on the agreement. If you already own equipment or have it on finance, refinancing can release cash from it.

A VAT quarter after a strong trading period can be large. A VAT loan spreads the payment to HMRC over a short run of monthly instalments, so you pay on time without draining working capital.