Restaurant Business Loans UK 2026: Complete Funding Guide
Finance your restaurant with specialist hospitality lenders. Equipment finance, working capital, expansion funding. £5k to £500k with fast approval.
Restaurant Funding Options (2026)
UK restaurants can access 7 different funding types depending on what you need to finance:
1. Kitchen Equipment Finance: £5k to £150k
Finance ovens, fridges, and kitchen fit-outs with asset finance at 5 to 9% APR. The equipment acts as security, making approval easier (75% approval rate).
Best for: New restaurant setup, kitchen refurbishment, equipment upgrades
Providers: Aldermore, Close Brothers, Hitachi Capital
2. Merchant Cash Advance: £3k to £500k
Most popular for restaurants. Borrow against future card sales, repay via daily percentage of takings. Approval in 24 to 48 hours based on card volume, not credit score.
Typical terms:
- Factor rate: 1.15 to 1.35 for restaurants (lower than retail due to consistent sales)
- Repayment: 10 to 20% of daily card sales
- Approval: 75 to 85% for restaurants processing £10k+ monthly
Best for: Cash flow gaps, stock purchase, refurbishment, seasonal restaurants
3. Restaurant-Specific Loans: £10k to £500k
Specialist hospitality lenders understand restaurant cash flow and seasonal patterns:
- Fleximize: £10k to £500k, 8 to 18% APR, restaurant specialists
- iwoca: £1k to £200k, 8 to 20% APR, fast approval (72 hours)
- Funding Circle: £10k to £500k, hospitality experience
- NatWest Business: £10k to £100k, existing customer rates
4. Invoice Discounting (B2B Catering)
For restaurants with corporate catering or B2B contracts, invoice finance advances 80 to 90% of unpaid invoices within 24 hours.
Cost: 1.5 to 3% discount fee (cheaper than MCA)
Best for: Contract caterers, corporate event catering, B2B meal delivery
5. Franchise Financing: £50k to £500k
Buying a restaurant franchise (McDonald's, KFC, Nando's) qualifies for specialist franchise finance with better rates due to proven business model.
Franchise lenders:
- HSBC Franchise Finance: 6 to 10% APR
- Lloyds Franchise Unit: 6 to 12% APR
- NatWest Franchise Team: 7 to 11% APR
6. Refurbishment Loans: £15k to £250k
For restaurant renovation, interior design, new décor. Lenders understand restaurants need periodic refurb every 5 to 7 years.
Terms: 3 to 7 years, 8 to 15% APR typical
7. Liquor Licence Finance: £2k to £50k
Some lenders offer specific funding for alcohol licences which can cost £5,000 to £30,000 in desirable areas.
How Much Can Restaurants Borrow?
Borrowing Power by Monthly Revenue
| Monthly Revenue | MCA Potential | Term Loan Potential |
|---|---|---|
| £10,000 | £10,000-£30,000 | £5,000-£15,000 |
| £25,000 | £25,000-£75,000 | £15,000-£50,000 |
| £50,000 | £50,000-£150,000 | £30,000-£100,000 |
| £100,000 | £100,000-£300,000 | £75,000-£250,000 |
Restaurant Funding by Purpose
- Start new restaurant: £50k to £250k (franchise finance, Start Up Loans, asset finance for equipment)
- Kitchen equipment: £5k to £50k (asset finance/hire purchase 5 to 9% APR)
- Stock/ingredients: £2k to £25k (MCA or working capital loan)
- Cash flow gaps: £5k to £50k (MCA, invoice finance if B2B, overdraft)
- Refurbishment: £15k to £100k (refurbishment loan, unsecured loan)
- Second location: £75k to £300k (expansion loan, secured loan)
Approval Requirements for Restaurants
Hospitality businesses face stricter lending criteria due to 60% failure rate in first 3 years. Requirements:
- Yes 12+ months trading (6 months possible with strong sales)
- Yes Food hygiene rating 4+ (5 preferred)
- Yes Positive cash flow or clear path to profitability
- Yes Business plan with realistic projections
- Yes Personal guarantee (for unsecured loans)
- Yes Experienced management (hospitality background valued)
Cost Comparison for £30,000 Restaurant Funding
| Option | Total Cost | Timeline |
|---|---|---|
| Equipment Finance (7% APR, 4 years) | £4,620 | 1 to 2 weeks |
| Unsecured Loan (12% APR, 3 years) | £5,880 | 2 to 3 weeks |
| Merchant Cash Advance (1.25x) | £7,500 | 24 to 48 hours |
| Bad Credit Loan (28% APR, 2 years) | £9,240 | 1 week |
Specialist Restaurant Lenders (2026)
- Fleximize: Understands hospitality cash flow, 8 to 18% APR
- Liberis: MCA specialist for restaurants, factor 1.15 to 1.35
- iwoca: Fast decisions for hospitality (72 hours)
- Kriya: Revenue-based lending for growing restaurants
Conclusion
Best restaurant funding by scenario:
- New kitchen equipment: Asset finance (5 to 9% APR, equipment as security)
- Cash flow gaps: Merchant Cash Advance (flexible, fast)
- Major expansion: Secured loan or investor funding
- Franchise purchase: Specialist franchise finance (6 to 12% APR)
Compare Restaurant Funding Options
We understand hospitality cash flow. Compare merchant cash advances, equipment finance, and working capital options for your restaurant.
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