Running a successful restaurant requires more than great food and excellent service – it also requires strategic financial planning. With the fluctuation in costs, and revenue being dependent on the time of the year, restaurants regularly turn to external financing in order to fulfil their commitments and ensure they maintain their level of service and offering. Restaurant loans present a sensible alternative to using your business’ working capital to fund necessary new equipment, refurbishments, or to acquire a new site.
There are a variety of loan options available to restaurant operators, in the guide below we dive into the implications of each financial product to help you navigate your restaurant finances and find the most suitable funding:
What is a restaurant loan?
A restaurant loan is a type of commercial finance designed specifically for the hospitality industry. Restaurant loans provide the capital needed to cover the cost of various aspects of restaurant operations.
Types of restaurant loans available:
Unsecured business loans
Unsecured loans are ideal for businesses that may not have significant assets to provide collateral for funding. This type of loan is useful for covering short term expenses, however unsecured loans are often more expensive than secured loans due to the increased risk to the lender – meaning the associated interest rate will be higher.
Secured business loans
Secured loans are available to those restaurants / restaurant owners with significant assets which can be used for collateral. Secured loans can provide access to larger amounts of finance at lower interest rates, compared to unsecured loans.
Merchant Cash Advances
As restaurants regularly take payments via card, merchant cash advances (MCA) present a viable funding option. Repayments are taken based on a percentage of daily card sales, meaning MCA’s are ideal for restaurants with fluctuating income, often linked to seasonality.
Asset finance
Rather than paying up front for costly equipment, asset finance allows your restaurant to acquire essential machinery and retain crucial cash flow. Instead of paying in one lump sum, you spread the costs of acquiring this equipment over time and repay the loan in monthly instalments.
Invoice financing
If your restaurant caters for large events or provides bulk orders, invoice financing allows you to unlock cash tied up in unpaid invoices, meaning you can access the funds prior to these invoices being paid.
Commercial property loans
For restaurant owners looking to acquire a new site, or refinance an existing property, a commercial mortgage can provide long-term funding.
What aspects of restaurants can be financed?
- New equipment and kitchen upgrades
- Renovation and expansion
- Stock and inventory
- Cash flow management
- Marketing and promotion
Why choose Mill Wood for restaurant finance?
Specialist hospitality finance broker
Since our inception over 25 years ago, we have specialised in providing restaurants and hospitality businesses access to funding tailored to their requirements. Over this time, we’ve built a deep understanding of the hospitality industry, and are proudly the exclusive finance partners of www.findarestaurant.co.uk.
Access to our wide panel of lenders
By applying through Mill Wood, you access our wide range of lenders, meaning we can tailor your finance to be the most suitable solution for your business.
After sales support
By working with us, you’ll have your own broker on the end of the phone rather than going through endless call centres. We’re on hand to help you, right up to the final date of the agreement.
Summary
Whether you are opening a new restaurant, expanding an existing one, or simply managing cash flow, securing the right financing to align with your strategy is crucial. At Mill Wood, we specialise in helping restaurant owners access tailored commercial finance solutions to support their business needs. Enquire here to speak with a specialist hospitality finance broker.
