What is Restaurant and Bar Finance?
Hospitality is a rewarding way to make a living, but a competitive and challenging one. Restaurant and bar finance helps businesses such as restaurants, pubs, hotels, leisure centres, nightclubs and bars to navigate these challenges. If you’re looking for financing for your new or established business, you’ll find plenty of tailor-made options from specialist lenders who know the hospitality sector.
How Does Restaurant and Bar Finance Work?
Here’s a quick overview:
Business loans:
These range from small loans with a short repayment period to larger amounts to be paid back over years. Unsecured loans generally have a lower borrowing threshold and steeper interest – you may have to provide a personal guarantee. Secured loans allow you to borrow more money over a longer period. However, if you can’t repay, you may lose your collateral.
Asset finance:
Lease and hire purchase arrangements allow you to spread the cost of equipment and fittings, avoiding large upfront investments. Repayment is monthly, with instalments including fixed interest and VAT. You can finance anything from a new cooker to an entire restaurant or hotel fit-out.
Refinancing:
If you have a lot of money tied up in expensive equipment, you may be able to refinance it to release some equity. This involves selling assets to a lender and making monthly payments to lease them back again.
Line of credit:
Opening a line of credit, such as a revolver, allows you to borrow up to a certain amount over a set period. You’ll be charged for each day you withdraw money.
How can I use restaurant and bar finance?
If your business is in the hospitality sector, you can apply for financing to fund any aspect of your operations, including:
Bridging a gap in cash flow
Purchasing or renting premises
Hiring, training and paying staff
Associated staffing costs, such as HR and legal
Purchasing stock and raw materials
Buying or leasing equipment and furnishings
Fitting out or renovating a restaurant, pub, hotel, leisure centre or other hospitality business
Acquiring and maintaining work vehicles
Buying another business or diversifying into a new line of activity
Franchising costs for restaurants, pubs and other chains
Everyday overheads, such as utilities and insurance
Tax and VAT payments
How can I apply for restaurant and bar finance?
Depending on the amount and purpose of the funding and how long you have been in business, lender requirements will vary. However, there are a couple of essential elements that will make your application stronger.
A great business plan:
This is a compelling way to show the lender that you know the sector, understand the risks and have a clear vision for your business. The more detail you can provide, the better. It’s also important to show that you’ve carefully assessed your existing or potential location(s), and have actionable plans to increase footfall.
Profit and loss projections:
Whether your business is well-established or just getting started, evidence such as balance sheets, cash flow statements and sales projections are crucial to making your case. You should also make sure that your personal and business credit scores are as healthy as possible.
Fast Finance for Hospitality Businesses
Secure funding to launch, expand or refurbish your restaurant or bar.
Flexible finance solutions can support equipment purchases, fit-outs, refurbishments and working capital — helping you grow while protecting cash flow.