Restaurant Business Loans UK 2025: Complete Funding Guide
Finance your restaurant with specialist hospitality lenders. Equipment finance, working capital, expansion funding. £5k-£500k with fast approval.
Restaurant Funding Options (2025)
UK restaurants can access 7 different funding types depending on what you need to finance:
1. Kitchen Equipment Finance - £5k-£150k
Finance ovens, fridges, and kitchen fit-outs with asset finance at 5-9% APR. The equipment serves 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-£500k
Most popular for restaurants. Borrow against future card sales, repay via daily percentage of takings. Approval in 24-48 hours based on card volume, not credit score.
Typical terms:
- Factor rate: 1.15-1.35 for restaurants (lower than retail due to consistent sales)
- Repayment: 10-20% of daily card sales
- Approval: 75-85% for restaurants processing £10k+ monthly
Best for: Cash flow gaps, stock purchase, refurbishment, seasonal restaurants
3. Restaurant-Specific Loans - £10k-£500k
Specialist hospitality lenders understand restaurant cash flow and seasonal patterns:
- Fleximize: £10k-£500k, 8-18% APR, restaurant specialists
- iwoca: £1k-£200k, 8-20% APR, fast approval (72 hours)
- Funding Circle: £10k-£500k, hospitality experience
- NatWest Business: £10k-£100k, existing customer rates
4. Invoice Discounting (B2B Catering)
For restaurants with corporate catering or B2B contracts, invoice finance advances 80-90% of unpaid invoices within 24 hours.
Cost: 1.5-3% discount fee (cheaper than MCA)
Best for: Contract caterers, corporate event catering, B2B meal delivery
5. Franchise Financing - £50k-£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: 6-10% APR
- Lloyds Franchise Unit: 6-12% APR
- NatWest Franchise Team: 7-11% APR
6. Refurbishment Loans - £15k-£250k
For restaurant renovation, interior design, new décor. Lenders understand restaurants need periodic refurb every 5-7 years.
Terms: 3-7 years, 8-15% APR typical
7. Liquor License Finance - £2k-£50k
Some lenders offer specific funding for alcohol licenses which can cost £5,000-£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-£250k (franchise finance, Start Up Loans, asset finance for equipment)
- Kitchen equipment: £5k-£50k (asset finance/hire purchase 5-9% APR)
- Stock/ingredients: £2k-£25k (MCA or working capital loan)
- Cash flow gaps: £5k-£50k (MCA, invoice finance if B2B, overdraft)
- Refurbishment: £15k-£100k (refurbishment loan, unsecured loan)
- Second location: £75k-£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:
- ✅ 12+ months trading (6 months possible with strong sales)
- ✅ Food hygiene rating 4+ (5 preferred)
- ✅ Positive cash flow or clear path to profitability
- ✅ Business plan with realistic projections
- ✅ Personal guarantee (for unsecured loans)
- ✅ Experienced management (hospitality background valued)
Cost Comparison for £30,000 Restaurant Funding
| Option | Total Cost | Timeline |
|---|---|---|
| Equipment Finance (7% APR, 4 years) | £4,620 | 1-2 weeks |
| Unsecured Loan (12% APR, 3 years) | £5,880 | 2-3 weeks |
| Merchant Cash Advance (1.25x) | £7,500 | 24-48 hours |
| Bad Credit Loan (28% APR, 2 years) | £9,240 | 1 week |
Specialist Restaurant Lenders (2025)
- Fleximize: Understands hospitality cash flow, 8-18% APR
- Liberis: MCA specialist for restaurants, factor 1.15-1.35
- 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 (5-9% APR, equipment as security)
- Cash flow gaps: Merchant Cash Advance (flexible, fast)
- Major expansion: Secured loan or investor funding
- Franchise purchase: Specialist franchise finance (6-12% 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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