What types of finance can restaurants, bars and cafés use?

Short answer and overview

Restaurants, bars and cafés commonly use a mix of working capital facilities, revenue-linked funding, asset and fit-out finance, and term loans to manage cash flow, invest in equipment, and refurbish premises. Options include merchant cash advances, overdrafts, revolving credit, leasing and hire purchase, VAT and tax funding, invoice and stock finance, sustainability loans, and government-backed schemes via participating lenders. The right choice depends on turnover, card takings, assets, trading history, seasonality, and growth plans.

Best Business Loans does not lend directly; we help UK hospitality businesses explore relevant finance routes and connect with suitable lenders or brokers. There is no obligation to proceed, and submitting a Quick Quote is free.

Popular finance types at a glance

• Working capital: business overdrafts, revolving credit facilities, short-term cashflow loans.
• Revenue-linked: merchant cash advances and revenue-based finance.
• Asset funding: equipment leasing, hire purchase, vehicle finance, and refinance.
• Fit-out and refurbishment: tailored loans for refits, extensions and rebrands.
• Tax and VAT funding: staged payment plans for VAT, PAYE or Corporation Tax.
• Receivables and stock: invoice finance, purchase order and inventory funding.
• Green upgrades: sustainability loans for energy efficiency and kitchen modernisation.
• Term loans and government-backed options: unsecured or secured loans via approved providers.

Important

All finance is subject to status, affordability and eligibility. Rates, fees and terms vary by lender, and late or missed payments can cause serious financial difficulties.

Working capital tools for day-to-day resilience

Hospitality cash flow rises and falls with seasons, weather and events, so flexible working capital tools can be vital. These facilities help smooth supplier payments, wages, utilities and rent. They also provide a buffer for unexpected costs or opportunities.

The main options include overdrafts, revolving credit, short-term loans and VAT or tax funding. Each serves a slightly different need and cost profile.

Business overdrafts and revolving credit facilities

An overdraft attached to your business current account helps cover short-term dips. You pay interest only on what you use. Limits depend on turnover, conduct of the account and the bank’s underwriting.

Revolving credit facilities operate like a larger, standalone overdraft with a separate provider. They can sit alongside your main banking. Draw down, repay and redraw within your limit without reapplying each time.

When it fits

• Bridging supplier bills before peak weekends or holidays.
• Managing payroll around card settlement times.
• Covering utilities during quiet trading weeks.

Short-term cashflow loans

These are typically unsecured, fixed-term loans from a few months to two years. They can be quicker to arrange than larger bank loans. Repayments are fixed, which helps budgeting.

They suit one-off needs such as minor refurbishments, menu relaunches or launching delivery channels. Lenders assess affordability using bank statements, management accounts and trading history.

VAT and tax funding

VAT and tax bills can strain cash flow if trading has been uneven. VAT loans and tax funding spread the cost over agreed instalments. Some lenders pay HMRC directly on your behalf.

This can help avoid penalties or overdraft strain. It turns a lump-sum liability into a manageable, planned expense.

Fit-out, equipment and asset finance

From commercial ovens and extraction to EPOS, furniture and cold rooms, hospitality is equipment-heavy. Asset finance lets you invest without large upfront costs, keeping cash free for operations. Options include leasing, hire purchase and refinance of existing assets.

Lenders focus on the asset’s quality, lifespan, resale value and the business’s trading profile. Structures can be tailored to match seasonality and expected wear.

Equipment leasing and hire purchase

Leasing allows you to rent equipment for a term, often with maintenance options. At term end, you can upgrade, return or extend. Hire purchase spreads the cost to eventual ownership after the final payment.

Both options can cover ovens, grills, refrigeration, coffee machines, dishwashers, EPOS, delivery bikes and more. Deposits vary, and agreements may require personal guarantees.

Typical hospitality assets

• Kitchen: combi ovens, fryers, grills, pizza ovens, refrigeration and cold rooms.
• Front of house: EPOS, handheld terminals, furniture, bar counters and glasswashers.
• Compliance and efficiency: extraction, air-con, insulation, LED lighting and heat pumps.

Fit-out and refurbishment finance

Bespoke fit-out funding supports rebrands, extensions, outdoor dining areas and compliance upgrades. It can bundle multiple cost lines: contractors, materials, signage and décor. Drawdowns may align with project milestones.

Lenders look at plans, quotes, permissions and contractor credentials. A clear ROI case, such as extra covers or improved throughput, strengthens applications.

Vehicle and fleet finance

Delivery vans, electric mopeds and refrigerated vehicles can be funded via asset finance. Agreements include hire purchase, finance lease or contract hire. Terms are tailored to mileage, usage and payload.

Green vehicles may access preferential terms with some providers. Fleet telematics and maintenance plans can be added for control and safety.

Cash flow from takings, receivables and stock

Many venues generate high card takings. Others trade B2B with events, catering or wholesale lines. There are specialist solutions to unlock value from these revenue streams. These can align repayments with sales or release cash tied up in invoices and stock.

Used well, they can reduce pressure and fund growth without heavy collateral. Lenders will assess transaction history, contracts and supplier terms.

Merchant cash advance (card takings finance)

A merchant cash advance provides a lump sum repaid via a fixed percentage of future card takings. Repayments flex with your sales. There is no fixed monthly instalment.

Approval often focuses on average monthly card sales and terminal statements. It can suit seasonal venues and pop-ups where income varies week to week.

When it fits

• Aligning repayments to busy and quiet weeks naturally.
• Financing menu launches or small refurbishments quickly.
• Bridging supplier payments ahead of major events.

Revenue-based finance

Some lenders offer advances repaid as a share of gross revenue, not just card sales. This can work for venues with a blend of cash, card and online orders. It is conceptually similar to a merchant cash advance.

Costs are expressed as a total payback rather than an APR in some cases. Check the effective cost carefully and model different sales scenarios.

Invoice finance for hospitality supply chains

Restaurants with catering, wholesale or corporate event contracts may invoice on terms. Invoice finance releases a percentage of the invoice value upfront. You receive the balance, less fees, when the customer pays.

Options include factoring (collections handled by the lender) and invoice discounting (you collect as usual). It can accelerate cash conversion without taking on long-term debt.

Purchase order, trade and inventory funding

For venues with wholesale, D2C or retail arms, trade finance can cover supplier purchases. Purchase order finance helps fulfil large orders without tying up cash. Inventory funding unlocks value in stock, subject to controls.

These products are more specialised and require robust documentation. Lenders assess supplier strength, margins and exit routes.

Energy efficiency and sustainability loans

Energy costs are a major driver of margins. Sustainability loans can fund efficient ovens, heat recovery, induction, insulation, LED lighting and EVs. Some lenders offer incentives for green upgrades or link to external grants.

Reducing kilowatt hours per cover can materially improve profitability. Track baseline usage to evidence savings post-upgrade.

Term loans, government-backed routes and how to choose

Beyond flexible facilities, many venues pursue term loans for expansion, acquisitions or new sites. These can be unsecured or secured against assets or debentures. Tenors typically range from 1 to 6 years, with fixed or variable rates.

Use term loans for predictable, long-horizon projects with clear ROI. Prepare a robust plan, forecasts and sensitivity analysis.

Unsecured and secured term loans

Unsecured loans rely on business performance and credit profile, often with personal guarantees. Secured loans may offer larger amounts or lower costs in exchange for collateral. Lenders consider trading history, profitability and leverage.

Common uses include second-site openings, kitchen expansions and marketing to drive covers. Early repayment options vary, so check terms carefully.

Government-backed options via participating lenders

The British Business Bank’s Growth Guarantee Scheme (GGS) supports lenders in providing finance to UK SMEs. It is delivered via accredited providers and may improve access to funding for eligible businesses. The government provides a guarantee to the lender, not to you.

Eligibility, facility sizes and pricing are set by participating lenders under scheme rules. Check the British Business Bank site for current criteria and availability.

How to choose the right finance for your venue

• Match the product to the purpose: short-term need equals short-term facility; long-term asset equals longer-term funding.
• Align repayments to your revenue pattern: consider seasonal dips and peak trading.
• Balance cost and flexibility: variable drawdown facilities cost more for convenience but reduce idle debt.
• Stress-test affordability: model 10–20% lower sales and higher costs.
• Check total cost of finance: include fees, security and early repayment charges.

Documents checklist

• Last 6–12 months of business bank statements.
• Latest management accounts and filed accounts.
• VAT returns and tax position.
• Lease details, premises licence and insurance.
• Card processing statements and EPOS reports.
• Quotes, project plans and supplier contracts for use of funds.

How Best Business Loans can help

We use intelligent data-matching to connect hospitality businesses with finance providers who are active in the sector. Our network covers working capital, merchant cash advances, asset and fit-out finance, vehicles, tax funding and term loans. You stay in control and decide which route to pursue.

If you want more depth on sector-specific options, read our guide to restaurant loans and finance options. When you are ready, submit a Quick Quote and we will introduce you to suitable lenders or brokers.

Start your Quick Quote

• Free, no obligation enquiry.
• Faster shortlisting of relevant providers.
• Clear, fair and not misleading information throughout.

Frequently asked questions

How fast can hospitality finance be arranged? Smaller working capital or merchant cash advance facilities can be approved within 24–72 hours once documents are provided. Asset and fit-out finance, or term loans for larger projects, typically take longer due to underwriting and legal checks.

Do I need security? Many hospitality facilities are unsecured but may require a personal guarantee. Secured options can improve pricing or access for larger amounts, using assets or a debenture, depending on provider policy.

Will lenders accept seasonal or variable sales? Yes, many providers expect seasonality in hospitality. Revenue-linked products like merchant cash advances flex with takings, and some lenders shape repayment profiles to your trading pattern.

Can new or recently opened venues get finance? It is harder without a trading record, but not impossible. Lenders may look at director experience, projections, deposits, pre-opening bookings and backing from investors.

What costs should I compare? Look at total payback, interest rates, arrangement and documentation fees, security or valuation costs, and any early repayment or non-utilisation charges. Compare like-for-like across the full term.

Key takeaways

• Match funding to purpose and payback period to avoid cash strain.
• Use flexible facilities for working capital and term loans for long-life assets or second sites.
• Revenue-linked options can suit seasonal venues by flexing with takings.
• Prepare quality financials and evidence of ROI to improve outcomes.
• Best Business Loans can connect you with relevant UK providers quickly.

Compliance and transparency

Best Business Loans is an independent introducer and does not provide loans or advice. Introductions are made to lenders or brokers who may pay us a commission, which does not affect the price you pay.

Eligibility, rates and terms are set by providers and depend on your circumstances. The government does not guarantee your business under GGS; the guarantee is to the lender.

Updated: October 2025