Trusted business loans for hospitality operators

Who is eligible and what lenders look for

Who is eligible for a business loan, and how do you become eligible? A hospitality business loan is available to Ltd companies, partnerships and sole traders, and the lender's central question is affordability: whether the trading cashflow can carry the repayments with headroom through the seasonal cycle. They look at the trading accounts and management figures, the EBITDA, the trend in occupancy, covers or wet and dry sales, the age of the business and its credit record, and, on an unsecured loan, the personal guarantee and the covenant behind it. Can a new Ltd company get a loan? Yes, though a young company with limited accounts is assessed more on the operator's experience, the business plan and the guarantee, and will usually carry a smaller loan and a higher rate than an established business with two or three years of trade behind it. Secured lending against property or assets widens what is available and lowers the rate, because the lender has recourse beyond the cashflow. We package the accounts, the plan and the seasonal story so the affordability case is clear, and we place it with a lender comfortable with hospitality trade rather than one that treats every sector the same.

How much you can borrow and over what term

How much you can borrow on a business loan turns on the trade and the security. An unsecured loan is typically sized as a multiple of monthly turnover or annual EBITDA, so a stronger, more consistent trade supports more, usually running from around 10,000 pounds to several hundred thousand, with larger facilities on strong accounts. A secured loan against property or other assets can go considerably higher, because the lender is not relying on cashflow alone. The term is usually one to seven years, and the right term balances the monthly cost against the total interest: a longer term lowers the instalment, which protects seasonal cashflow, but costs more over the life of the loan. The repayment profile matters as much as the amount in hospitality, because a loan sized sensibly but repaid on a flat profile can still strain a business that earns in bursts, so we structure the schedule around the seasonal shape. We model the amount and the profile against the accounts before approaching lenders. All bands are illustrative, vary by lender and trade, are subject to credit approval, and are not an offer.

Interest rates, security and the cost of borrowing

The cost of a business loan is set by the risk the lender is taking, so security and the strength of the trade drive the rate. An unsecured loan is dearer than a secured one, because the lender relies on the cashflow and the guarantee rather than a charge over an asset, and a young or seasonal business pays more than an established one with steady accounts. Pricing is a fixed or variable rate over the term, and it varies by lender and trading history rather than sitting at one figure. Expect an arrangement fee on many facilities, and check for any early repayment charge if the loan might be cleared early, for example when a refinance or a property sale comes through. The headline rate is not the whole cost: a shorter term costs less in total interest even at the same rate, and the cheapest facility overall depends on the fee, the term and whether security is offered. We compare the total cost across lenders, disclose our broker fee in writing, and never claim an exclusive tie to any lender. The figures are indicative and not an offer of finance.

A business loan against secured property finance

A business loan and a property-secured facility do different jobs, and the right choice turns on what the money is for and how long it is needed. A business loan funds the trade, working capital, a fit-out, a seasonal gap or a new site, and it is quick to arrange and needs no property security in its unsecured form, which suits a short or operational need. Secured property finance, a commercial mortgage or a cash-out refinance, is cheaper and longer but slower to arrange and needs an asset to charge, so it suits a larger or longer-term need where the saving over the life of the debt outweighs the time and cost of putting a charge in place. Where a business owns property, releasing capital through a refinance is often cheaper than an unsecured loan for a substantial or long-lived purpose, while an unsecured business loan wins for speed and for a shorter need. Asset finance is the better route for funding specific equipment such as a kitchen or FF&E, because it secures against the equipment itself. We compare the options on cost, speed and security so the money is raised on the right structure.