What are the funding options for hospitality businesses?

Funding Options outlines some finance methods to help hospitality businesses recover following Covid-19 restrictions

Following a lengthy period of unprecedented disruption, hospitality businesses across the UK are once again gearing up for growth. So, what financial options are out there today?

Meeting hospitality business’ cash flow needs

If you run a hospitality business, you may be in need of a cash flow boost to help you grow your business post lockdown or to adapt your premises for customers.

Whatever your circumstances, there are a few funding options to choose from.

Examples of what you can use business funding for:

  • Hire new employees
  • Purchase more stock or inventory
  • Purchase new equipment (e.g. refrigeration equipment) machinery or vehicles
  • A refurbishment of your premises
  • A gap in funding

The days of having to rely on your high-street business bank for finance are long gone.

Alternative (or non-bank) lenders have been funding businesses of all shapes and sizes for years. In addition to this, the Recovery Loan Scheme (RLS), the newest iteration of government supported lending has recently gone live and will enable many more businesses to get the vital funding they need.

Here are a few examples of business finance types that could help you boost your venue’s cash flow as we continue to emerge from the lockdown.

1. Unsecured loans

Unsecured loans are available for businesses that don’t own many assets, don’t want to offer security or need finance quickly.

Without the need for valuations, unsecured loans are almost always quicker to get because the legal process is simpler. The upfront fee, if there is one, also tends to be lower.

2. Revolving credit facility

A revolving credit facility is a flexible finance type that enables you to access finance for your hospitality business on a ‘tap in, tap out’ basis. You can withdraw money when you need it, use it to pay for something, repay it then withdraw it again at a later date. And with a revolving credit facility, you only need to pay interest when funds have been ‘tapped’ into.

3. Merchant cash advance

A merchant cash advance differs from a traditional loan in the sense that instead of making fixed monthly repayments, you only pay it back as a percentage of your future customer card transactions. It’s flexible to your sales intake – meaning you less more when you’re trading less and vice versa.

4. Asset finance

When it comes to securing an asset in the hospitality sector, there’s often no time to waste.

The problem is, the capital to buy new equipment isn’t always readily available.

Asset finance lets you access the asset you need without having to pay for it upfront. Instead, you can spread the cost of the asset. Examples of hospitality assets you might need finance for:

  • Air conditioning
  • Catering equipment
  • CCTV
  • Furniture

5. Business credit cards

A business credit card can help you manage cash flow, spread costs, facilitate staff spending and keep track of short-term expenses.

Whether you need to pay a supplier, redecorate, get additional stock or boost your working capital, a business credit card can be the lifeline your business needs. Depending on the credit card you choose, there’s also the added benefit of cashback or rewards.

Financial support from the UK Government

Find out what support you’re eligible for from the Government, if you haven’t done so already. To recap, here’s what’s available (for the full information, visit the Government’s business support page).

Local Restrictions Support Grant (second payment)

This covers the period between 16 February to March 31 2021 and is available through your local authority. Businesses required to close will receive up to £4,714 for the 44-day qualifying restrictions period, depending on the rateable value of the property.

Applications for payments for this period close on May 31 2021.

Restart Grants

As of April 1, the Local Restrictions Support grants were replaced with Restart Grants, which are designed to support businesses as they reopen following the lifting of restrictions.

Non-essential retail businesses can receive up to £6,000 per premises and hospitality and the other sectors that opened later can claim up to £18,000 per premises.

The Coronavirus Job Retention Scheme (CJRS)

This is currently set to finish at the end of September 2021 and is available for all eligible firms across the UK, including hospitality businesses.

Self-Employment Income Support Scheme (SEISS)

SEISS 4 will provide support for the three months from February and SEISS 5 will provide support from May until the end of September 2021.

The SEISS is for self-employed individuals whose businesses have been negatively impacted by COVID-19. Those looking to claim the fourth grant must make their claim on or before June 1.

5 per cent reduced rate of VAT

The 5 per cent reduced rate of VAT for goods and services supplied by the tourism and hospitality sectors will run until the end of September 2021. The rate will rise to 12.5 per cent from October until the end of March 2022, and return to 20 per cent from April 2022.

Business rates

In England, the 100 per cent business rates holiday for the retail, hospitality and leisure sectors is due to end in June 2021. For nine months afterwards, businesses will receive 66 per cent relief (capped).

Discover your eligibility

At Funding Options, we’ve simplified the process of finding and applying for business finance by combining our business finance expertise with our innovative Funding Cloud technology.

In just a few easy steps, you can find out what finance you might be eligible for to help you get back on track (or set your growth plans into action).

To start the process, just let us know how much you need, what you intend to use the funds for and how quickly you need them. Our team of Business Finance Experts are here to help you throughout the process, from starting the application to money in the bank.

Explore your funding options today

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