Running a hospitality business is a complex, challenging and competitive task. You are already an established venture and have been running your hotel or restaurant for many years. Still, you want to enhance your current venue or buy a new one. This can only be possible with sufficient funding as a backup.
It is where business loans for hospitality sector can come in. You can avail of these loans for a maximum of 60 months. With approval on these loans, you can accomplish several commercial purposes, such as purchasing fresh premises or equipment to grow your business.
Operating a hotel or a restaurant is a dream of many individuals. By looking at the trends of the UK in the past few years, it is undoubtedly a profitable venture. The average cost of a hospitality business is around £300,000 to £450,000. Therefore, the businesses should have a solid and stable financial plan to be approved for funding up to £500,000 to continue their venture.
To help you set an effective business plan, Thebusinessfunds has gathered everything to assist you in financing your hotel or restaurant business. Make a smart decision by applying here to find and compare the best deals on business loans for restaurants and hotels.
A restaurant or hotel business loan is industry-specific business finance available for well-established businesses in the hospitality sector in the UK. It involves financing hotels, restaurants, pubs, motels and accommodation hubs. You can apply for these loans to purchase an existing hotel, locate your own, or smarten up existing premises.
Several other business loan options are available, and you can opt for the most suitable one for your situation. They may have particular terms and conditions which you have to follow. We suggest opting for a more specific funding product, which is made especially for your standard needs.
Once approved for the loan, you can use the borrowed sum to manage various upfront and current expenses. The best way to use the loan amount is to find a reasonable property in a good location where you can discover a firm customer base. You do not have to worry about an apt loan deal and instant approval because we will do the hard work for you.
Still, there are many expenses you can cover with these loans while dealing with your business needs. These consist of:
Remember that these business loans can only manage the costs to allow the business to grow and run. You can cover more expenses such as paying insurance premiums, purchasing new inventory, utility payments, wages, and paying rent for your hotel or restaurant.
Hospitality business loans are an effective means of funding ventures providing accommodation like hotels and motels, food and beverages in restaurants, cafes, bars, pubs and many more.
This sector has peaked for the last couple of years, and many reasons contribute to it. For instance, people worldwide consider the UK their dream destination to travel, which demands a massive availability of hotels. Companies indulging in the hospitality sector want a variety of growth capital loans to meet the growing demand. It is where these business loans for restaurants and hotels prove effective.
Here are the benefits of these loans, which you can obtain once you get approval from your hospitality business loan lender:
Get better with cash flow: You want to pay your bills on time and suppliers without delay. You can manage such costs with these loans irrespective of seasonality and increasing debts by going for invoice finance.
Update your business: You have been running your hotel or restaurant for many years, but it is time to update it to meet consumers' demands. Use the loan amount to improve the structure of the premises and update the assets to attract maximum customers.
Modernise your equipment: You can only continue with the same equipment for a few years. At some point in time, you need to enhance them. With the easy availability of these hospitality loans, you can upgrade by installing modern equipment to do timely daily operations.
Fund your expansion plan: These loans help finance your next business expansion. Getting funds up to £500,000 is enough to manage the subsequent venue establishment and arrangements like hiring new staff, insurance, and registrations.
Easy availability of loans: You may need help finding a new and relevant loan deal. Of course, you need help from a reliable broker. We are ready to hold this responsibility and deliver tailor-made deals on hospitality business loans.
The helping hand of Thebusinessfunds is always there for you in getting the right restaurant or hotel business loan in the UK. Still, we can only work hard on your behalf if you are good at loan preparation, such as keeping your financial documents related to tax returns and bank and income statements intact.
You should consider many steps to grow your loan approval chances and use the borrowed sum for exemplary purposes. These include:
A stable business plan
Like new businesses, established hospitality ventures must keep a stable business plan to share with their lenders. It should reflect the motives, goals, and overall business strategy you have carried over the years. Buying a new building for one more hotel or eating place becomes essential. Your business plan should mention how you will operate and generate revenue to ensure further growth and expansion.
An effective finance plan
Some lenders prefer to have a well-organised finance plan from the businesses. Since they have been running their ventures for a short or longer duration, they must have a clear financial plan to share with them. It should include how you will use the loan amount while opening your restaurant or hotel at a new location. It allows lenders to analyse how much you need and prescribe an affordable amount to you, which you can repay easily.
An improved credit score
Although our lenders are flexible in their lending approach, they still require a decent business credit score. It helps them to verify your financial credibility and how you have handled your finances in the past. Do not worry. They only do soft credit checks not reflected in their credit profile. Therefore, we suggest you remain debt-free while applying for commercial loans for hospitality businesses.
There are many options available to get finance for restaurants and hospitality ventures. These range from traditional lending firms like banks to modern-day online lenders in the UK. They bring variety in their business products so that you can choose the best option for your hospitality business needs.
These loans are particularly customised to finance the purchase of new commercial property. Many restaurants and hotels prefer this as they can get better deals. However, you need to pay higher interest rates to get commercial property finance.
| Advantages | Disadvantages |
|---|---|
| You can easily purchase a new hotel or restaurant. | You need to pay higher interest rates. |
| You can find various deals available on these loans. | Lenders require large deposits, which may put an extra burden on you. |
| These are specialised loan products for commercial properties. | You can only use the loan amount for property-related expenses. |
Equipment Finance
Get a perfect deal available on equipment finance for restaurants and hotel businesses. Use the equipment as the loan collateral and get the funds to purchase fresh assets for your hospitality business needs.
| Advantages | Disadvantages |
|---|---|
| Loans are available in huge varieties, such as commercial hire purchases, lease finance, etc. | You may get confused about which type of equipment finance suits you well. |
| Low-interest rates are there as you have secured the loan with your commercial asset. | These loans will increase your debt cost due to fees that lenders put on. |
| You can get equipment finance without disturbing your cash flow. | Your asset will be at risk if you default in between. |
You can opt for a secured loan if you need larger funding and are ready to put a business asset as loan security. The value of your loan collateral will determine your loan amount. You get the loan for a larger term, making it easier to handle the loan instalments.
| Advantages | Disadvantages |
|---|---|
| Get lower interest rates on the loans. | Defaulting on a loan means you will be losing your assets. |
| You can obtain higher loan amount. | Approval may take time as your asset needs to be evaluating carefully. |
| You can use the loan for any business purpose. | If you do not have assets to pledge, qualifying may become difficult. |
The unavailability of an asset to secure the loan does not disqualify you from getting a loan straightaway. You have another type of hospitality loan available: unsecured loans. These are perfect funding sources to calm financial emergencies or short-term cash requirements.
| Advantages | Disadvantages |
|---|---|
| These are risk-free loan where no asset is needed. | You get only a small amount to borrow. |
| These loans are available offline and online and have a fast processing time. | A low credit profile can create problems or demand a personal guarantee. |
| These are multi-purpose loans and can be used for any business need. | Unsecured loans always have higher interest rates than secured ones. |
You should compare various deals available on funding for restaurant and hotel businesses. Several things need to be considered when you compare various loan offers. For instance, you need to check lenders' records in approving the loan, interest rates and other charges.
We help you choose the best loan option for your hotel and restaurant business. We have summarised some vital factors to consider while comparing business loans for restaurants and hotels.
Loan interest rates: One of the most vital things to compare is the interest rate. Different lenders have different rates and fees. You should research and choose the best rate as per your business income.
Loan terms: Compare the loan terms as lenders vary on these. Some may offer up to 5 years, while others allow borrowing more or less. We suggest you finalise the loan term matching your business return and its repayment capacity.
Loan amount: Analyse your financial goals and expenses, and then choose the final loan amount. Besides, you should consider various types of hospitality business loans and their amount limit before concluding.
Risks: Many hotels and restaurants make the mistake of ignoring the risks involved in the loans. For example, you should check the risks associated with loan collateral. You should read the terms and conditions carefully, as you will lose your assets during loan default.
Eligibility and application procedure: Many lenders have different eligibility conditions. In general, lenders consider your business credit score, annual revenue and time in business. Similarly, do not choose a loan offer with a complex application process. You can consider an online application procedure to access the funds quickly.
At Thebusinessfunds, we first understand the financial needs of your hotel and restaurant business and then start finding the most appropriate loan offers. Choose short-term loans if you need funds instantly to fill a funding gap while purchasing another venue. Otherwise, you can opt for long-term business loans for larger funding.
You can approach us as your hospitality business loan broker, and you can trust us because of these following reasons:
You can avail of our hospitality business loan guidance for free. We ask lenders to pay us, not you.
We are the experts in comparing the best deals on commercial loans for hospitality businesses.
We are not here to advertise any lender. We are independent in giving neural advice to a business.
You can post your loan enquiry any time and from anywhere. We are always available to serve your purpose.
Are you ready with your enquiry on business finance for hotels and restaurants? Visit our contact page and talk to our loan expert now.
There are many ways to determine which type of commercial loans for hospitality businesses are right for you. Ask these questions first to yourself and then move towards a loan deal:
There are specific steps to follow to apply for a hospitality business loan. These include:
The advantages of restaurant or hotel business loans are many, but at the same time, there are some possible disadvantages, too. You must provide the commercial asset for loan collateral, such as property or equipment. If you default, you will lose possession of it to the lender. Besides, you should have a decent credit score, as a low credit profile will halt your chances of guaranteed approval.
The interest rates differ from lender to lender, but the standard factors determine the actual loan cost. These are like:
Some lenders charge upfront fees, but we suggest only those loan providers who do not surprise you with sudden charges. Your loan affordability also matters a lot.
Yes, it can be hard to obtain approval for hospitality loans. Many hotel and restaurant owners want a loan, but not all can approve their loans. However, it may be complex or challenging, but not impossible. If you prepare well and have the helping hand of hospitality business loan brokers like us, everything will be in your favour. Apply now to compare various deals and choose the best one.
