Can bridging finance be used to purchase a pub at auction?

Short answer: Yes — bridging finance is a common and practical way to buy a pub at auction because auctions require speed. A commercial bridging loan can provide funds for an auction deposit and completion within the typical 28-day timescale, and then be repaid by refinancing to a longer-term commercial mortgage, sale or other capital. However, bridging lenders will want to see a clear exit plan, an up-to-date valuation, licence and tenancy details, and evidence you can meet the deposit requirement. If you want tailored introductions to lenders and brokers who regularly handle pub auctions, complete our Free Eligibility Check to get matched quickly.

Note: UK Business Loans is an introducer — we do not lend and do not provide regulated financial advice. The enquiry form is not an application: it helps us match your business with the most suitable lenders or brokers.

Quick answer (expanded summary)

Bridging finance is widely used to buy pubs at auction because it provides fast access to capital. Auction contracts usually require a non-refundable deposit (commonly 10%) on the day and completion within a short period (often 28 days). A commercial bridging loan can fund the purchase quickly, pay for immediate works or stock, and then be repaid when you refinance to a commercial mortgage, sell the property, or use other capital. Lending decisions hinge on property value (current and after-repair), licensing position, tenancy/tie arrangements and a credible exit plan. If you need to act quickly, get pre-approval or an indicative bridging term before the auction. Get Quote Now — Free Eligibility Check to see which lenders or brokers can move at auction speed: https://ukbusinessloans.co/get-quote/

What is bridging finance and why it suits auction purchases

Bridging finance (a bridging loan or commercial bridge) is short-term, typically arranged for 1–12 months (commercial bridges can be structured for longer). It’s secured against the property you are buying and designed to fill a timing gap — for example, between paying an auction deposit and securing a longer-term mortgage. Key features:

• Speed: applications and offers can be turned around in days rather than weeks.
• Security: lenders usually take a legal charge on the property.
• Higher cost: interest rates and arrangement fees are higher than long-term commercial mortgages.
• Flexible underwriting: lenders consider current value, after-repair value (ARV) and trading potential.

Auction purchases demand rapid funding: bridging provides the speed many buyers need to exchange and complete on time.

How bridging works when buying a pub at auction (step-by-step)

1. Pre-auction preparation — get a broker or lender conversation, arrange a solicitor and surveyor, and have proof of funds for the deposit. A short pre-approval or indicative offer improves your bidding position.
2. At the auction — if you win, you normally pay a non-refundable deposit (commonly 10%) and sign the contract straight away.
3. Immediate post-auction steps — instruct your solicitor to exchange; the completion date is set (commonly 28 days). The bridging lender will need to instruct valuation, legal searches and identity checks fast.
4. Completion — the bridging lender releases the balance to the solicitor for completion, taking first charge on the pub.
5. After completion — refurbish, transfer licences and begin trading. The bridge is repaid when you refinance to a commercial mortgage, sell, or use cash reserves.

Get Quote Now — Free Eligibility Check: complete the 2-minute form and we’ll match you with brokers and lenders who specialise in pub auctions: https://ukbusinessloans.co/get-quote/

Typical lender criteria for pubs and auction purchases

Bridging lenders consider both the asset and the borrower. For pubs, key checks include:

• Valuation & security — an up-to-date commercial valuation, sometimes reflecting ARV after refurbishment. Lenders typically lend up to 60–75% LTV depending on condition and exit plan.
• Licence and planning — valid premises licence and clarity on how/when it transfers. Delays in licence transfer can prevent trading and affect the exit plan.
• Leases, tenancy and brewery ties — whether the property is tied to a brewer, has existing tenancies, or includes onerous covenants impacts income and marketability.
• Borrower profile — experience in running hospitality or a strong operator increases lender comfort. Some lenders will consider less experienced buyers if the security and exit are robust.
• Exit strategy — clear plan to refinance to a commercial mortgage, sell, or repay from capital is essential.
• Minimums — many bridging lenders and brokers handle loans from around £10,000 upwards; pub purchases typically require larger bridge amounts.

Timescales, fees and deposit mechanics for auctions

Auction deposit: usually 10% of the purchase price, payable on the day by bank transfer or cleared funds. Some auction houses accept a guaranteed cheque — check the lot particulars.

Completion period: commonly 28 days from exchange, though the lot conditions state the exact timeline. A specialist auction bridge can meet that deadline if valuations and legal work run to plan.

Common costs:

• Arrangement/broker fee: typically 1–3% of the loan (sometimes split between broker and lender).
• Interest: higher than long-term finance; may be rolled up (capitalised) or paid monthly.
• Valuation and legal fees: paid by borrower as part of the process.
• Exit fees or early repayment charges: possible with some lenders — clarify in advance.

Many buyers cover the deposit from own funds. Some specialist bridges will fund the deposit and balance, but lenders often prefer the buyer to show commitment by providing the deposit themselves.

Key risks and pre-bid checks

Auctions sell lots “as seen” with limited warranties — risks are higher than private treaty purchases. Before bidding:

• Commission a structural or suitability survey if possible and check utilities, roof, damp, and major costs (asbestos, electrics).
• Confirm the premises licence position and likely transfer timing with the local authority and solicitor.
• Review any brewery tie or lease and understand obligations on supply, repairs and rent.
• Check rates, VAT liabilities, outstanding debts or enforcement actions against the property.
• Have a robust exit plan: refinancing conditions, trading forecasts and contingency if valuations fall.

Failing to carry out checks can leave you with unexpected costs or difficulty refinancing at the end of the bridge.

Exit strategies — refinancing, long-term mortgage or sale

Common exit routes for an auction bridge on a pub:

• Refinance to a commercial mortgage — preferred where the buyer wants long-term, lower-cost financing. Lenders often require evidence of trading or a convincing ARV.
• Sell the property — if the plan is a flip, repay the bridge from sale proceeds.
• Hybrid routes — longer commercial bridge terms, staged releases for works, or development finance if major conversion is planned.

Plan your exit before bidding. Lenders will want to see realistic timings and valuation support for your chosen route.

How UK Business Loans helps — fast, free, no-obligation introductions

We match pub buyers with brokers and lenders experienced in auction bridging and hospitality finance. Our service is free to business owners and designed to help you:

• Get a quick eligibility check so you can bid with confidence.
• Be introduced to lenders who understand pubs, licences and brewery ties.
• Compare indicative terms so you know likely costs and timeframes.

Complete our short enquiry — it’s not an application, it simply helps us match you to the right provider: Get Quote Now — Free Eligibility Check. We are not a lender and we do not provide regulated financial advice.

For wider sector information see our pubs sector page: /pubs-business-loans.

FAQ

Footer & disclaimer

UK Business Loans is an introducer that connects businesses to lenders and brokers. We do not lend and we do not provide regulated financial advice. Any finance offered will be subject to the lender’s or broker’s checks, terms and conditions. Loan amounts commonly start from around £10,000 and upwards. Always seek independent legal and surveyor advice before bidding at auction.

Ready to start? Complete the simple enquiry to get matched with bridging lenders and pub finance specialists: Get Quote Now — Free Eligibility Check

1) Can bridging finance be used to purchase a pub at auction? — Yes, commercial bridging loans are commonly used to buy pubs at auction because they provide fast funding for deposits and completion within typical 28-day timelines.

2) Will a bridging loan cover the 10% auction deposit? — Some specialist bridging lenders will fund the deposit and balance, but many expect buyers to show the deposit themselves to demonstrate commitment.

3) How quickly can a bridging lender complete for an auction purchase? — Specialist auction bridging lenders can provide indicative offers in days and complete within typical auction timescales (often 28 days) if valuations, legal checks and ID are fast-tracked.

4) What documents and checks do bridging lenders require for pub auctions? — Lenders usually want a commercial valuation (and ARV if relevant), premises licence details, lease/tenancy or brewery tie information, ID, and a credible exit plan.

5) How much can I borrow against a pub with a bridging loan (LTV)? — Typical bridging LTVs for pubs range from around 60% to 75% depending on condition, exit strategy and valuation.

6) Will lenders lend on tied pubs or properties with tenants? — Some lenders will consider tied pubs or tenanted properties, but terms depend heavily on the lease, length of tie, cashflow implications and marketability.

7) What are the typical costs and fees for an auction bridging loan? — Expect higher interest than long-term finance plus arrangement/broker fees (commonly 1–3%), valuation and legal fees, and possible exit or early repayment charges.

8) What exit strategies do bridging lenders accept for pub auctions? — Common exits include refinancing to a commercial mortgage, selling the property, or using other capital, and lenders will require realistic timings and valuation evidence.

9) What key risks should I check before bidding on a pub at auction? — Commission a survey where possible, confirm licence transferability and timing, review any brewery ties or covenants, check outstanding rates or enforcement actions, and ensure a robust exit plan.

10) Does completing UK Business Loans’ enquiry affect my credit score? — No — our Free Eligibility Check is not an application and does not affect your credit score, though lenders or brokers may perform credit checks later if you progress.