There are many factors that contribute to the successful running of a restaurant given the cut-throat competitive nature of the hospitality industry; exquisite food, standout service and an all-round dining experience that leaves customers not only wanting to return but eagerly recommending it to others.
At the heart of every restaurant operation is cost management, an aspect requiring thoughtful oversight and sound decision making. With overhead expenses always prevalent and typically on the rise, boosting your capital is essential in order to provide the business with stronger foundations for faster growth and a brighter future for all involved.
One way of doing this is through securing a restaurant business loan, a finance solution with unique properties available to those who meet the qualification requirements.
With a variety of appropriate loan options available to restaurant operators, we will walk you through the different options and the implications each will bring.
What is a restaurant business loan?
A restaurant loan is a commercial finance solution designed specifically for the hospitality industry.
This form of loan allows operators to gain access to the immediate capital needed to cover costs or create flexibility for operation growth to help propel the business forward.
Let’s delve into the different varieties of business loan that can be available to your restaurant.
Merchant Cash Advances
A handy finance solution for restaurants dealing with seasonality issues affecting income. Due to restaurants regularly receiving payments via card, merchant cash advances allows for repayments to be taken based on a percentage of daily card sales.
Secured Business Loans
Often providing a larger amount of capital with lower interest rates compared to unsecured loans, a secured business loan is typically available to restaurant owners with sizeable assets which can be used for collateral.
Unsecured Business Loans
On the contrary to secured loans, unsecured business loans are a viable option for restaurant businesses without significant assets to provide collateral for third-party funding.
A lack of assets means increased risk to the lender so this loan comes with higher interest rates, but it is still a great option for those looking to cover short-term expenses.
Asset Finance
Good equipment is essential for business success but it does come at a steep cost. Asset finance, however, allows your restaurant to spread the costs of equipment acquisition and pay through monthly instalments instead of one up-front large payment.
Commercial Property Loans
Ideal for those looking to acquire a new site, or refinance an existing property, a commercial mortgage will provide you with long-term funding.
Invoice Financing
Unpaid invoices can be a painful frustration that business owners across all sectors are all too familiar with.
This form of loan allows restaurant operators to unlock finance tied up in unpaid invoices, meaning you will not have to worry about waiting until the invoice is settled. This is perfect for those who provide large orders or cater for large events.
What parts of a restaurant can be financed?
There are many aspects of a restaurant that can be stabilised and often elevated courtesy of a financial loan:
- Cash flow management
- Purchase order financing
- Kitchen upgrades and new equipment e.g. EPOS systems, furniture, commercial ovens
- Fit out
- Expansion and renovation
- Marketing
What is the eligibility criteria for securing a restaurant business loan?
Lenders are specific with their criteria for financing, which is why it is important your business knows the right solution for the unique circumstances you are facing.
Eligiiblity criteria for restaurant operators applying for a loan includes:
- Cash flow
- Trading history
- Business plan
- Credit score
- Collateral or guarantee
- Full UK registry compliance
Do you need help landing a business loan for your restaurant?
As experienced hospitality and restaurant consultants, we understand the challenges and complications businesses face in the hospitality sector today. Recent UK governing changes from the last budget have meant that from April 2025 employment costs are increasing, placing yet another financial complexity on owners up and down the nation.
This is why we have partnered with Mill Wood Finance – commercial finance brokerage with over 25 years experience in providing hospitality businesses access to funding, suitably tailored to their requirements.
As our exclusive restaurant finance partner, the team at Mill Wood have access to a large pool of lenders so they can help secure you the most competitive finance solution. With over 200 successful projects and counting, £100m+ of funding secured, enquire today to join the growing list of restaurants growing their capital.