What are the funding options for hospitality businesses?

Business Economic Syndicated NewsMarch 12, 20263 Mins read6 Views

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By Lucy Wayment on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

What funding options are available for hospitality businesses?

It feels like the hospitality sector has been in crisis for a while. In the last half-decade, we’ve had the pandemic, rising energy prices and the cost of living, not to mention rail strikes, cybersecurity risks, and increased NI contributions to contend with.

But even during hard times, many bars, hotels and restaurants manage to thrive, and funding is a great way to enhance your resilience. Whether you’re starting a hospitality business, in a position to expand or are looking for some extra financial support during a difficult period, here’s a list of the main funding options available to your business.

Grants, charities and local funding

Many operators made use of hospitality business grants, the furlough scheme and business rates relief during the height of covid restrictions, but all of these schemes have since been withdrawn. For those seeking out business grants for hospitality today, your best bet is probably a charity or your local council.

You can use this tool to find your local council’s website and check if there are any grants or funding opportunities currently available. Don’t worry if you’ve just missed one – new schemes launch all the time, so keep checking back.

Hospitality Action

Hospitality Action, the trade charity for the hospitality industry, offers grants. But unlike council funding, Hospitality Action is more about supporting individuals who work or have worked in hospitality, whether they’re struggling due to illness, addiction, family problems, mental health issues, financial difficulty, or something else.

Business loans and other lending products

You could also borrow money from a bank or lender and pay it back over time. Hospitality business loans are generally for companies that are in a position to grow, but it all depends on your financial history and what you’re looking to achieve.

Alternative lenders

Fortunately, these days there’s a wider variety of providers to choose from, including both high street banks and newer, alternative lenders like Kriya (invoice finance, loans, and embedded finance), Fleximize (loans of up to £,500,000), Close Brothers (asset and invoice finance, and specialist loans), some of which may be able to provide funding more quickly than high street banks.

There are many reasons why a hospitality business owner might take out a loan, from keg and cask rentals to spreading the cost of a big stock purchase. If you’re looking to invest in a new piece of kitchen equipment, for example, you might consider asset finance, where you can get something big without spending a lot of money up front, by hiring it or paying the purchase off over time.

Specialist property finance

As a hospitality business owner, there’s a high chance you’ll turn to a lender when it comes to property too, whether it’s buying somewhere, refurbishing an old space or expanding your existing premises. Maybe you’ve come across the perfect location, but the property needs a lot of work until it’s fit for purpose; perhaps you’re just looking to expand. Either way, there are plenty of specialist lenders out there, who could help you open your next pub, convert an office into a hotel or turn a dilapidated building into a neighbourhood restaurant, as long as you’re creditworthy enough.

Ultimately, there’s far less government support than there used to be, even though times are still tough for many hospitality firms. But there are still places where you can seek out external funding, from local councils to charities to traditional business loan providers.