How much cash do you need to buy a bar?

Plan around the loan, but list what sits outside it too. A lender may fund equipment and part of the purchase, but will set its own terms and will not lend against everything. The cash you bring covers the gap and the first weeks of trading. Here are the pieces to put on your list before you talk to a lender.

What lenders will not lend on

Goodwill is the value of the customers and name. Ask whether a lender will expect you to fund it from your own money. Ask each lender how it treats goodwill and what equity it expects. The lender will set its own terms, so ask for them in writing and compare. Your accountant can explain how the pieces fit together.

Stock, deposits and the wait to trade

Ask whether liquor stock is counted at closing and paid for on top of the price. The landlord may want a deposit or a new guarantee from you. Ask whether you can trade in your own name on closing day or must wait, and who covers the gap. Your lawyer can explain how that works for your place.

Repairs, float and reserve

Bars wear out: draught lines, coolers, kitchen equipment and washrooms all take a beating. Have a technician look at the equipment before you commit. You also need a till float for opening day and a reserve to cover slow weeks, staff changes and surprises. A reserve that is too thin forces hard choices in the first season.

A list to take to your lender

• Cash for the part of the price the lender will not fund.
• Opening liquor and food stock.
• Lease deposit and landlord costs.
• Repairs and replacement of equipment.
• Till float, and a working reserve.

For the general question, see how much money do you need to buy a business, and for loan structure, financing a bar and pub acquisition.