Restaurant loans to refit, equip and grow your restaurant

Yes. UK restaurants commonly borrow through unsecured business loans for refits and cash flow, asset finance for kitchen equipment, merchant cash advances repaid from card takings, and commercial mortgages or acquisition finance to buy premises or an existing restaurant. Smart Funding Solutions, a whole-of-market commercial finance broker, approaches lenders with appetite for hospitality, including new openings and established sites.

Which finance fits which need

• Kitchen and equipment: commercial kitchen equipment finance, including refrigeration finance and coffee machine finance.
• Refit or refurbishment: an unsecured business loan. See how to finance a restaurant fit-out.
• Seasonal cash flow: a merchant cash advance that flexes with card sales, or a revolving credit facility.
• Buying premises or a restaurant: a commercial mortgage or acquisition finance.
• Opening a new restaurant: a government-backed Start Up Loan of up to £25,000 at a fixed 7.5%, alongside equipment finance. See how to get a loan to start a restaurant.

What lenders look at

• Card terminal and bank statements, including your quietest months.
• Gross margin, staff costs and the length left on your lease.
• Your food hygiene rating (Food Standards Agency: food hygiene rating scheme).
• Experience running hospitality sites, especially for a new opening.

Takeaways, cafes, pubs and franchisees can read takeaway business loans, pub and bar loans, hospitality business loans and franchise loans. The Growth Guarantee Scheme can also support eligible restaurants. To see which lenders fund restaurants like yours, use Instant Quotes.

Yes. A second site is usually funded with a mix of finance, such as asset finance for the kitchen, a business loan for the fit-out and opening costs, and a commercial mortgage if you are buying the building. Lenders lean heavily on how your first restaurant trades, so Smart Funding Solutions, a whole-of-market commercial finance broker, puts your existing figures in front of the lenders on our panel that fund hospitality growth.

What do lenders want to see before funding a second restaurant site?

• A first site that stands on its own. Accounts, management figures and card takings showing it trades profitably without you on the pass every night.
• People to run both. A head chef and manager in place, so the first restaurant does not slip while you open the second.
• The new site's numbers. Heads of terms or the lease, fit-out quotes, opening costs and a forecast that allows for a slower first few months.
• Your own money in. Lenders usually expect a contribution from the business or its owners.

Before the doors open

In England, Wales and Northern Ireland, GOV.UK's guide to starting a food business says you register each premises with its local authority at least 28 days before you start trading, and registration is free. The new restaurant gets its own food hygiene inspection, so the rating at your first site does not carry across.

As an illustration only, with no rates or terms, an owner with one profitable restaurant takes a lease on a second unit across town. Ovens, refrigeration and extraction go on kitchen equipment finance, the fit-out on fit-out and refurbishment finance, and a small working capital line covers staff training and the first weeks of stock. Some owners use the Growth Guarantee Scheme where a lender offers it. Our guide to financing a restaurant fit-out goes into the build itself, and Instant Quotes shows which lenders on our panel may fund your next site, with no credit search.

Restaurants take money daily, mostly by card, but pay out in lumps: weekly wages, supplier accounts for food and drink, rent quarters and VAT. Margins depend heavily on food and labour costs, and trade moves with the seasons, the weather and local events. Delivery platform income usually lands in periodic payouts rather than on the night. Lenders look at all of this through your bank and card statements, so a restaurant with steady covers and controlled costs is a much stronger borrower than one with high turnover but thin margins.

There are two common moments. When trade is strong and your current site is at capacity, finance can help you build on that success with more covers, a refit or a new location. When trade is slipping because of a tired interior, an outdated menu or new competition, investment can help turn things around, provided the plan is realistic and repayments stay affordable.

Most restaurant business loans fall into one of these, matched to what the money is for.

• Kitchen equipment and fit-out items: asset finance, so the kit itself supports the borrowing.
• A refit, marketing or general growth: an unsecured business loan over one to five years.
• Seasonal, card-heavy trade: a merchant cash advance repaid as a share of card takings.
• Buying the freehold: a commercial mortgage.
• Buying an existing restaurant: acquisition finance, covered below.

To see which lenders on our panel fit your restaurant, start with Instant Quotes.

Buying a trading restaurant is usually cheaper and quicker to fund than opening one, because lenders can see real takings. The funding is sized on the restaurant's card and bank statements and its profit after a fair wage for the owner, alongside your own contribution. Most restaurant sales are leasehold, so the lender will look closely at the lease: how long is left, the rent, any rent review due and whether the landlord will consent to the assignment.

Plan the licences and VAT early. A premises licence for alcohol has to be transferred to the new owner and you need a designated premises supervisor in place (GOV.UK: alcohol licensing), and a sale of the business as a going concern is usually outside the scope of VAT if the conditions are met. Our guide to acquisition finance explains deposits and deferred payments to the seller, and hospitality business loans covers pubs, cafés and hotels.

Buying or opening a franchised store follows similar steps, with the franchisor's fees added; see our Subway franchise finance guide for a worked example.