Restaurants business loans — typical interest rates and fees in the UK

Summary: Interest rates and fees for restaurant business loans vary widely by product, lender, credit profile and security. Typical ranges (2024): secured bank term loans 3%–8% pa, unsecured loans 6%–25% APR, asset finance 4%–12%, MCAs 30%–150% APR equivalent, invoice finance 0.5%–3% per invoice/month. Arrangement, valuation and legal fees commonly apply. Submit a short enquiry for tailored, no‑obligation quotes from lenders and brokers who understand hospitality. Get Quote Now — Free Eligibility Check

Quick snapshot — typical rates and fees for restaurants

• Secured bank term loans: typically 3%–8% pa (fixed or margin over base rate) — lower for strong security and trading history.
• Unsecured business loans: typically 6%–25% APR depending on credit and age of business.
• Asset finance / hire purchase: typically 4%–12% for strong credit; 15%+ for higher risk or specialist equipment.
• Merchant cash advance (MCA): extremely variable — effective APR often equivalent to 30%–150% depending on factor rate and term.
• Invoice finance: fees typically 0.5%–3% per invoice per month, plus set‑up/facility fees.
• Bridging & short‑term loans: 6%–15% pa plus arrangement fees.
• Overdrafts & business cards: overdraft rates often 7%–15% variable; cards 18%–30%+ APR.
• Arrangement fees: typically 0.5%–3% of the facility; legal, valuation and monitoring fees may also apply.

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Why rates for restaurant loans vary so much — what lenders look at

Restaurants are a sector with specific risks: tight margins, seasonality, lease obligations, staffing costs and sensitivity to economic or local footfall changes. Because of this, lenders price for both industry risk and the individual business’s profile.

Key factors lenders assess:

• Business & director credit history and any adverse filings (CCJs, defaults).
• Time trading, turnover, gross margin and net profitability.
• Cashflow patterns and bank statements (seasonality, peaks and troughs).
• Security offered: property, equipment or personal guarantees reduce risk and usually lower rates.
• Loan purpose — fit‑out, equipment, purchase, refinancing or working capital.
• Product type and term — short high‑cost facilities vs longer term secured loans.
• Number of sites — multi‑site groups often access better pricing than single‑site high‑risk ventures.

Because of these variables, the same restaurant could be offered very different deals by different lenders. Get Quote Now to receive tailored offers from partners who specialise in hospitality.

Typical rates and fees by product

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Bank term loans (secured)

Typical: 3%–8% pa or a margin over base rate. Fees often include arrangement 0.5%–2% and legal/valuation costs. Use for property purchase, long‑term capex or refinancing. Lenders expect covenants and security (charge on property or personal guarantees).

Unsecured business loans

Typical: 6%–25% APR. Fees vary; higher APRs for limited trading history or weaker director credit profiles. Good for working capital or smaller fit‑outs where security is not available.

Asset finance & hire purchase

Typical: 4%–12% depending on asset and credit strength. Often structured with a deposit and fixed payments. Useful for major kitchen equipment, refrigeration or vehicles; equipment itself often used as security.

Invoice finance

Typical fee: 0.5%–3% per invoice per month or a discount fee. Useful for restaurants that supply catering contracts or trade clients and need to unlock cash from unpaid invoices.

Merchant cash advance (MCA) & revenue‑based finance

Factor rates translate into very high APRs — often equivalent to 30%–150% APR. Repayments are taken as a percentage of card receipts, so cost depends on sales volumes and speed of recovery. Only suitable for short‑term needs where alternatives are unavailable.

Bridging & short‑term loans

Typical: 6%–15% pa. Faster to arrange than long‑term finance but more expensive. Used for property purchases or to bridge to longer‑term funding.

Overdrafts & business credit cards

Typical: overdrafts 7%–15% variable; credit cards often 18%–30%+. Good for short, flexible cover — check monthly fees and transactional charges.

Typical fees to expect (arrangement / other charges explained)

• Arrangement / establishment fee: 0.5%–3% of the facility (sometimes fixed).
• Legal & valuation fees: borrower often pays for legal work and property valuations when security is taken.
• Facility / annual fees: some lenders charge ongoing monitoring fees (0.5%–1% pa).
• Early repayment charges: common on fixed‑rate loans — usually a percentage or interest compensation.
• Default / late payment fees: set out in T&Cs — read them carefully.

Tip: Ask lenders for a full repayment schedule and the APR (includes fees) so you can compare like‑for‑like.

Example cost scenarios (indicative)

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How restaurants can get the best rates

• Prepare 12–24 months of bank statements and management accounts plus a 12‑month cashflow forecast.
• Demonstrate stable turnover and explain seasonal swings (how you manage quieter months).
• Offer security where possible — property or equipment reduces perceived risk and rates.
• Resolve director credit issues where possible (clear small defaults, provide explanations for historic events).
• Choose the right product — avoid using high‑cost short‑term options for long‑term needs.
• Use brokers or specialists with hospitality experience — they can structure packages and present your business in the way lenders expect.
• Compare APR‑inclusive quotes and check covenants, early repayment options and fees.

Get Quote Now — we’ll match you to lenders/brokers who understand restaurants

Documents lenders commonly request — checklist

• Business bank statements (typically last 3–6 months).
• Company accounts (last 2–3 years) or management accounts for newer businesses.
• VAT returns (if applicable) and tax records.
• Cashflow forecast covering the loan period.
• Lease or property ownership documents, rent statements.
• Proof of ID and address for directors.
• Quotes or invoices if funds are for equipment or fit‑out.

Need help preparing documents? Start your enquiry

Which lender types suit different restaurant needs

Choosing the right lender depends on your situation:

• New sites / start‑ups: specialist start‑up lenders, asset finance and short unsecured facilities (rates higher).
• Established single‑site: high‑street banks (secured term loans), asset finance for equipment.
• Multi‑site or franchise: commercial lenders and development finance that can price for scale.
• Emergency cashflow: overdrafts or short‑term revenue products—but beware of cost; consider invoice finance or a small term loan where possible.

If you want options tailored to your circumstances, our industry page on restaurants business loans explains common solutions for hospitality businesses and typical lender types. Free Eligibility Check

How we work — important compliance & data notes

UK Business Loans is an introducer — not a lender or financial adviser. We connect UK businesses with lenders and brokers. Submitting an enquiry is free and does not affect your credit score. Quotes shown are indicative — lenders will carry out checks before an offer.

We only share your details with approved lenders and brokers relevant to your enquiry. Submitting our short enquiry form is free and no obligation; lenders or brokers will contact you directly with quotes or next steps.

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Frequently asked questions (FAQ)

What interest rate will my restaurant be offered?

It depends on credit, trading history, security and product. Typical ranges: secured 3%–8%, unsecured 6%–25%, MCAs much higher. Use our free form to get tailored quotes.

Does submitting an enquiry affect my credit score?

No — submitting an enquiry via UK Business Loans does not affect your credit score. Lenders may perform credit checks later if you apply.

Can I get finance with poor credit?

Possibly — some specialist lenders consider businesses with adverse histories, but expect higher rates and stricter terms. We can match you to lenders who consider non‑standard profiles.

Are merchant cash advances suitable for restaurants?

MCAs provide quick access to cash but are often very expensive. They can help in short emergencies but are rarely the best long‑term option.

What is the difference between APR and interest rate?

Interest rate is the nominal cost of borrowing; APR includes interest plus certain fees to give a single comparable rate. Always compare APRs where possible.

How quickly can I get funds?

Timescales vary: some facilities can provide funds within days (MCAs, bridging, asset finance), while bank term loans may take weeks. We’ll aim to match you to partners who can meet your timeframe.

Do you charge to introduce me?

No — our introduction service is free to business owners. Lenders or brokers may charge their own fees; these will be disclosed by them.

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Ready to compare? Complete our short enquiry (takes 2 minutes) and we’ll match you with lenders and brokers who can provide quotes for your restaurant. No obligation. No cost. Start Your Free Eligibility Check

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1. What interest rates can restaurants expect for business loans?
Typical 2024 ranges: secured bank term loans 3%–8% pa, unsecured loans 6%–25% APR, asset finance 4%–12%, and merchant cash advances with effective APRs often 30%–150%+.

2. How can I get the best rate for my restaurant loan?
Improve director credit, provide 12–24 months of bank statements and a 12‑month cashflow forecast, offer security where possible, and compare APR‑inclusive quotes from lenders or brokers experienced in hospitality.

3. Will submitting an enquiry via UK Business Loans affect my credit score?
No — submitting the short enquiry is free and does not affect your credit score, though lenders may carry out checks later if you apply.

4. What typical fees should restaurants expect in addition to interest?
Expect arrangement/establishment fees (0.5%–3%), legal and valuation costs for secured deals, facility/monitoring fees, and potential early repayment or default charges.

5. Can restaurants with poor credit still get business finance?
Yes — some specialist lenders consider adverse histories but you should expect higher rates, stricter terms, and targeted introductions to lenders who accept non‑standard profiles.

6. Which finance type is best for buying kitchen equipment or POS systems?
Asset finance or hire purchase is usually best for equipment because the asset itself acts as security and rates are commonly 4%–12% for good credit.

7. Are merchant cash advances (MCAs) a good option for restaurant cashflow needs?
MCAs provide very fast access to cash via a sales‑linked repayment but are often extremely expensive in APR terms and should be a last‑resort short‑term option.

8. How quickly can I receive funds once I apply for restaurant finance?
Timescales vary by product — MCAs, some asset finance and bridging loans can be funded in days, while secured bank term loans typically take several weeks.

9. What documents will lenders commonly request for a restaurant loan application?
Lenders usually ask for recent business bank statements (3–6 months), company accounts or management accounts, VAT/tax records, cashflow forecast, lease or property documents, ID for directors and supplier quotes if relevant.

10. How does UK Business Loans help restaurants find finance and does it cost anything?
UK Business Loans is a free introducer that matches your enquiry to trusted UK lenders and brokers who specialise in hospitality — we don’t lend, give advice or charge you for the introduction.