Without proper funding, even the best business ideas are not able to flourish. If you’re worried about how to finance a restaurant in the UK, the prospect of third-party funding has most likely crossed your mind. You will want a reliable and supportive funding option to get your restaurant to start thriving. Every funding option is different, so the best option depends on what your restaurant needs to meet its own individual needs. With the help of a qualified restaurant consultant, restaurant financing options become easier to understand. There are various aspects of the funding process that you need to consider before moving forward. Here is what you need to know about restaurant financing in the UK.
What Are Some Reasons You Might Need a Loan?
Starting up your restaurant involves several aspects that need to be given significant attention, such as hiring employees, buying kitchen equipment, hiring chefs, and setting up the décor and furniture in your restaurant. You also need quite a bit of investment to purchase ingredients and stock.
If you’ve just opened up a new business, you will also take some time before people learn about your restaurant and your business really takes off. This means you’re likely to have quiet periods where sales are at a minimal—but you still need to take care of your employees and stay stocked up on fresh ingredients.
A loan can come in handy for any of these reasons. The following are some more reasons for needing restaurant funding.
Purchasing New Kitchen Appliances: Buying top-notch kitchen appliances actually saves you more money in the long run. This is because new appliances and equipment don’t need frequent repairs and are even designed to consume less energy. They’re also more efficient.
However, when you’ve just launched your business, you may not have enough funds, and yet your restaurant can’t function without these essential appliances. That’s why a loan is perfect for setting the standard of your restaurant while ensuring that you don’t use up all your investments in one place.
Working on Your Restaurant’s Design: Whether you’re looking to renovate your current restaurant or are trying to design a newly purchased premise, you need a significant amount of money to manage all the décor, furniture, paint, lighting, etc. You might even be considering upgrading your toilets to more energy-saving options.
With adequate funding, you can pay for expanding your restaurant’s floor plan when your business starts to grow, or for getting trendier furniture when your layout starts looking outdated.
Hiring and Training Staff: If you want your restaurant to thrive, you need qualified, efficient employees. That’s why loans can even help you pay for top of the lines chefs and invest in effective training session sessions for your employees.
Marketing: A new restaurant is extremely dependent on its marketing strategy in order to get it on its feet. You’ll need various marketing methods, such as social media, pamphlets, banners, emails, etc.
You might even need to hire a professional social media marketer to help you create the perfect online impression. These investments are vital for your restaurant and are valid reasons to need funding.
How Many Funding Options Are There?
Some of the most common restaurant finance options are as follows.
- Business Loans– With this loan option, you can go for either a secured business loan or an unsecured business loan. The difference is that you need an asset against a secured business loan to function as security, while with an unsecured business loan you do not.
- Asset Finance– With asset finance, you can fund the purchasing of restaurant equipment. This works by increasing the time you have to return the loans on costly kitchen appliances. The benefit of this kind of loan is that you can invest in high-quality equipment from the get-go and not have to worry about running out of funds.
- Invoice Finance– If you’re worried about your restaurant having cash flow problems, invoice finance helps free as much as 95% of the money in unpaid invoices. This comes in three options, invoice factoring, selective invoice finance, and invoice discounting. This helps overcome the issues pertaining to unpaid invoices and help with your cash flow.
- Merchant Cash Advance– If your restaurant accepts payments with cards, a merchant cash advance helps you repay loans alongside your restaurant’s sales. This helps because you get some leniency with regards to paying back the lender. This kind of cash advance is similar to an unsecured financial loan.
How Do You Qualify for a Loan?
For a loan in the UK, you need to ensure that your restaurant is registered in the UK. Get in touch with a restaurant consultant in order to thoroughly understand the procedure and paperwork involved.
If you want to opt for an unsecured business loan, your restaurant should have been functional for 4 or more months, you need to have a bank account in the UK, and you need to have an annual turnover of £10,000 at a minimum.
For a secured business loan, you need to be the owner of at least one valuable asset. When you get in contact with a lender, they will be able to provide you with more in-depth requirements of what you need in order to qualify for a loan.
Before you apply for a loan, you need to do a significant amount of research. You must know what the policies are for repayments, how you qualify for the type of loan you are interested in, and whether the lender has any hidden costs. Flexible repayments are preferable for restaurants that are just starting off because they are still trying to kickstart their business.
You should also go for an option that lets you have access to your money soon after the loan has been approved, so you don’t have to wait several weeks to start making your necessary purchases and upgrades.