What is the overall finance cost for a pub refurbishment — and how is it disclosed?

Summary: The overall finance cost for a pub refurbishment includes the principal borrowed plus interest, arrangement and legal fees, insurance, VAT (if applicable), contingency and any early repayment or late-payment charges. Lenders and brokers must disclose key information — including a representative APR, pre‑contract terms and an itemised fee schedule — at agreed stages so you can compare offers. For a quick, no-obligation match to pub finance specialists, complete a Free Eligibility Check: Get Quote Now.

Quick summary / Key takeaways

• Overall finance cost = principal + total interest + all fees (arrangement, valuation, legal) + insurance + VAT (if not reclaimed) + contingency and any early repayment charges.
• APR (Annual Percentage Rate) is the standard for comparing offers; it includes interest and some mandatory fees but not all optional charges, so read the pre-contract information.
• Obtain itemised quotes showing staged drawdowns, timing of fees and any balloon payments — then compare on total cost and monthly cashflow impact.

Why knowing the overall finance cost matters for pub owners

Refurbishing a pub is a major investment that affects cashflow and profitability. A small change in interest or hidden fees can turn a profitable project into a strained business. For example: a 2% difference in rate on a five‑year, £150,000 loan can add tens of thousands of pounds in interest over the term. Knowing the complete finance cost helps you set realistic budgets, price the offering, and ensure the project delivers long‑term returns rather than short‑term headaches.

What makes up the overall finance cost?

Below are the main components you should expect and check on every quote.

Principal

The principal is the refurbishment sum you borrow — e.g. £150,000. Make sure your contractor cost plan is robust and includes a contingency (typically 10–20%).

Interest

Interest is charged by lenders either as a fixed or variable rate. The nominal rate is the headline interest; APR converts interest plus certain fees into a single annualised percentage to help comparison. Note: APR is useful but may not include all optional costs (insurance, some legal fees) so ask for an itemised Total Cost of Credit.

Fees (arrangement, valuation, legal, broker)

Typical fees include arrangement/booking fees (often 1–3%), valuation and surveying fees, solicitor/legal fees, and sometimes broker fees. Some fees are paid upfront; others may be added to the loan which increases interest costs. Always check whether fees are refundable if the loan does not complete.

Secured charges and registration costs

If the loan is secured on property or assets you’ll see legal costs for creating charges, land registry fees and possible mortgage arrangement charges. Secured loans usually carry lower interest but require formal property documentation.

VAT, contractor retentions & contingency

VAT on contractors’ invoices is often payable during the project. Decide whether to include VAT in the loan amount or pay from cash reserves — each option affects monthly payments and APR. Staged retentions by contractors and a contingency sum (10–20%) are common and should be funded or accounted for.

Insurance, business interruption & running costs

You may need to budget for construction insurance, increased business interruption cover and additional running costs (utilities, temporary closure costs). Some lenders require proof of appropriate insurance as a condition of funding.

Example: Estimated total finance cost for a typical pub refurbishment (illustrative)

Representative example (illustrative only):

• Refurbishment budget (principal): £150,000
• Loan term: 5 years (60 months)
• Fixed interest rate: 8.0% per annum
• Arrangement fee: 2% = £3,000 (paid upfront or added to loan)
• Legal & valuation fees: £1,200 (paid upfront)

Monthly repayment (capital & interest, annuity): approximately £3,043. Total repaid to lender over 5 years ≈ £182,573. Total interest ≈ £32,573. Add upfront fees of £4,200 (arrangement + legal) and the overall cash cost to the business ≈ £36,773. If fees are added to the loan the APR will be higher than the 8% nominal rate — a representative APR for this scenario might be around 9.5% (illustrative).

What this shows: the headline interest rate tells only part of the story. Fees and whether they are paid upfront or capitalised change both monthly cashflow and APR. Always ask for a breakdown: principal, total interest, itemised fees, and a sample repayment schedule.

How lenders and brokers must disclose costs

Lenders and brokers should give clear, timely information so you can compare offers fairly. Key disclosures and when to expect them:

• Representative APR / Total Cost of Credit: A standardised figure that includes interest and mandatory fees for comparison. Always ask what’s included in the APR.
• Pre-contract information & key facts statement: Before you sign, you should receive a document showing total amount financed, APR, monthly payments, fees, ERCs and any security required.
• Timing of disclosure: Marketing materials and initial quotes should be clear and not misleading; once you apply you should receive an indicative cost and, on offer, a full pre-contract pack.
• What to look for in a quote: whether interest is fixed or variable, which fees are included or excluded, staged drawdown charges, early repayment charges (ERC), and any balloon payments at the end.

Comparing funding types for a pub refurbishment

Different products suit different needs — here’s a quick comparison:

• Unsecured business loan: Faster, no property security, but higher APRs and usually lower maximum amounts.
• Secured business loan / commercial mortgage: Lower rates, longer terms, secured against property — suitable for large refurbishments and borrowing £10k and upwards.
• Asset finance / hire purchase: For equipment (kitchen, bar fittings). Secured on assets, often structured to match asset life.
• Bridging finance: Short-term, fast — but higher cost; useful where timing between sale/purchase or funding milestones matters.
• Invoice finance / working capital: Not a direct refurbishment loan but can free up cashflow during works.

Choose a product that matches the project length, security you can offer, and your cashflow profile.

How to get an accurate quote — step-by-step

1. Prepare a project cost plan with contractor quotes, VAT treatment and a 10–20% contingency.
2. Gather trading accounts, bank statements and short-term cashflow forecasts to show affordability.
3. Decide whether you can offer property or assets as security and whether you want an interest‑only or capital & interest structure.
4. Submit one quick enquiry so brokers see consistent information — this reduces repeated credit checks and speeds comparisons.
5. Ask each provider for an itemised offer showing APR, total interest, fees, drawdown schedule and ERCs.

When you’re ready, complete a Free Eligibility Check and we’ll match you to specialist pub lenders and brokers: Free Eligibility Check.

Ways to reduce the overall finance cost

• Increase security or provide a deposit — secured loans are usually cheaper.
• Lengthen the term to reduce monthly payments (trade-off: more total interest).
• Negotiate arrangement and legal fees, and check whether fees can be paid upfront rather than capitalised.
• Use staged drawdowns and a cost-certified payment schedule to avoid paying interest on funds not yet used.
• Choose competitive lenders and use brokers to compare multiple offers quickly.

UK Business Loans — how we help

UK Business Loans connects pub owners to specialist lenders and brokers who understand hospitality and pub refurbishments. We do not lend — we introduce you to providers that suit your project and budget. Complete a short enquiry and we’ll match you with partners who can present detailed, itemised quotes for loans from £10,000 upwards. Learn more about specialist pub funding in our industry page on pubs business loans.

FAQ

Will applying for quotes affect my credit score?

Submitting an enquiry through UK Business Loans does not affect your credit score. Lenders may perform soft or hard checks later when progressing an application — ask each provider which checks they use.

Are broker fees included in the APR?

Some broker fees are included in the APR if they are mandatory and financed. Independent broker commission may be separate — always ask for itemised broker fees.

Can I include VAT and contingency in the loan?

Often yes — many lenders will finance VAT and contingency sums. Check whether you can reclaim VAT afterwards and whether funding VAT increases the APR.

What is an early repayment charge?

An ERC is a fee charged if you repay the loan early. It protects the lender’s anticipated interest. Always ask about ERC rates and whether they decline over time.

How fast can I get a quote?

Many brokers respond within hours during business hours once they have full project details. Submitting a complete enquiry speeds the process.

Next steps

If you’re planning or pricing a pub refurbishment, get clear, comparable quotes before you commit. Complete our simple enquiry to receive tailored matches to the right lenders and brokers — Get Quote Now. No obligation — just clear offers so you can choose the best finance for your pub.

Important: examples on this page are illustrative. Actual rates, APRs and fees vary by lender and depend on credit profile, security and the precise structure of the loan. Always read pre-contract information and ask providers for a full itemised cost schedule before agreeing to finance.

1. What is APR and why is it important when comparing pub refurbishment loans?
APR (Annual Percentage Rate) shows the annualised cost of credit including interest and mandatory fees so you can compare loan offers on a like‑for‑like basis.

2. How much can I borrow for a pub refurbishment through UK Business Loans?
Our lending partners typically provide pub refurbishment finance from around £10,000 up to multi‑million amounts depending on security, product and credit profile.

3. Can I include VAT and contingency in a pub refurbishment loan?
Many lenders will finance VAT and a contingency sum, but you must check VAT reclaimability and how capitalising VAT and contingency affects APR and repayments.

4. What typical fees should I expect on a pub refurbishment loan (arrangement/legal/broker)?
Common fees include arrangement (often 1–3%), valuation and solicitor fees, and possible broker fees — some are payable upfront and others can be added to the loan, increasing total interest and APR.

5. How should I compare multiple pub refurbishment finance offers?
Compare representative APR, total cost of credit, itemised fees, drawdown timing, monthly cashflow impact, ERCs and a sample repayment schedule to see the full cost and affordability.

6. Will submitting an enquiry via UK Business Loans affect my credit score?
No — the enquiry form is not a loan application and won’t affect your credit score; lenders may carry out soft or hard checks later if you proceed.

7. Which types of finance are best for pub refurbishments (secured vs unsecured)?
Secured commercial loans or mortgages usually offer lower rates for larger refurbishments, unsecured loans are faster but more expensive, and asset finance, bridging or invoice finance suit specific needs like equipment or short‑term gaps.

8. How quickly can I get an accurate quote for a pub refurbishment?
Provide a full project cost plan and trading documents and brokers often return indicative quotes within hours during business hours.

9. What is an early repayment charge (ERC) and how does it affect total cost?
An ERC is a fee charged if you repay the loan early to compensate the lender for lost interest, and it can materially increase the cost of exiting a loan so check the ERC schedule.

10. How can I reduce the overall finance cost for my pub refurbishment?
Lower costs by offering security or a deposit, negotiating arrangement/legal fees, extending the term carefully, using staged drawdowns to avoid interest on unused funds, and comparing multiple lenders via a broker.