Restaurants across the UK are finding that it is easier than ever before to access unsecured business loans. High street lending such as a bank loan or other traditional types of lending is being overshadowed by new types of alternative finance which are well suited and more attractive to the hospitality sector.
Alternative finance for restaurants
Take for example a merchant cash advance. It’s a business loan that works with cash flow, it repays less when sales are slow and pays off quicker when sales are high. As many restaurants use PDQ merchant gateways to process sales from their customer’s credit and debit cards this type of alternative finance is raised against your restaurant’s monthly turnover. Let’s say if your restaurant takes £8,000 a month on card sales you may qualify for a £8,000 business cash advance.
I’ve recently visited some of the hotels and restaurants that we’ve helped throughout the years and the feedback has been positive. I like to feel that our product and service work for our customers and always look for feedback – especially constructive criticism. The feedback was incredible. The product is working for them in a clear and transparent way.
We have found that many clients look to renew their lending towards the end of the loan especially as they didn’t feel a fallout in their financial results. Quite the opposite in fact. Many who required the funding and improved their business through the access to such funds all grew – bottom line.
What can this alternative finance be used for?
Some needed the funds to renovate and improve their business, one or two had an immediate cash flow issue, in both cases, the advance worked well.
The product itself although being heavily funded by the UK government via the Investment arm of The British Business Bank is still relatively unheard of in the UK. In the USA it has been around for years and many businesses use the facility on a daily basis. Those businesses who have used the cash advance have suggested it to fellow business owners.
But can we do more to promote the wider scale of alternative business funding available to businesses in the UK? Start-up enterprise finance has only recently become more available through the alternative finance space. Crowdfunding and peer-to-peer lending have become the saviour for anyone taking the leap into setting up their own business or trying to launch a business idea. The alternative finance space continues to grow steadily and awareness of these products has been helped by banks referring customers they couldn’t help to such sources. The banks may decline customers due to bad or poor credit, or failing strict underwriting criteria, so it has been good that the banks have been asked by the government to tell their customers about alternative lending options.
Who can qualify?
Restaurants, gastro pubs, bars, cafe’s and hotels can all qualify for a business cash advance as they all take card payments from their customers. This coupled with the hospitality sector seeing positive times is giving way to lenders keen to invest and lend out to growing businesses.
The UK is currently basking in positive figures for the tourism sector and more and more restaurants are looking to capitalise. Quality, well-designed establishments and award-winning menus are the benchmark if a restaurant is looking to build a successful business. So it’s important that restaurants, gastro pubs and other hospitality businesses have access to the funds they need, when they need it.