Guide
Going concern or bricks and mortar: which one you are borrowing against
Updated
Pub lenders take two valuations and treat them very differently. Knowing which number your loan actually sits against explains the deposit you are being asked for and the security beyond the property.
Two numbers, one loan
The going concern value reflects the business trading. The bricks and mortar value reflects the building if it stopped. On a well-trading pub the first is usually the larger, sometimes considerably.
A lender will look at both, and the part of the loan sitting above bricks and mortar is supported by the trade rather than the property. That is the risky part from their side and it is where deposit requirements, shorter terms and personal guarantees come from.
Why alternative use matters
A pub in a village with no realistic alternative use has a low bricks and mortar figure. One in a town where the building could convert has a much higher floor, and lenders notice.
Planning protections on public house use, where they apply, cut the other way by restricting conversion. It is worth establishing the planning position early because it moves the floor under your loan.
What you can do about the gap
Reduce it with deposit, or accept the consequences in structure: a shorter term, tighter covenants, a personal guarantee, or a requirement to hold cash.
None of those is unreasonable given what the lender is being asked to support. What is unreasonable is discovering the structure at offer stage having modelled the deal on the going concern value alone.
Trading record
Lenders want accounts, and the number of years they want varies. A pub with a short or interrupted record has no maintainable figure to test, which narrows the pool sharply.
If you are buying a closed pub or one with poor records, expect to be treated as a development or refurbishment case rather than as a trading business purchase, and price that accordingly.