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Peer2Peer Finance News | August 18, 2019

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Alternative finance could address rising restaurant cash flow woes

Alternative finance could address rising restaurant cash flow woes
Anna Brunetti

UK RESTAURANT owners risked more than £200m of their own money last year to keep their business afloat and should consider alternative finance options, new research from Funding Options claims.

The alternative finance aggregator platform found that the value of director’s loans to their own restaurants jumped by 18 per cent in the last year to £210.4m.

Funding Options said that the Brexit-induced weak pound had raised the cost of imported food and wine, hitting the profit margins of many restaurants. The increased national living wage and compulsory pension auto-enrolment has added to their expenses, the firm added.

Funding Options said that a lack of bank lending is also a key driver of the growth of owners lending to their own restaurants.

The firm said that stricter risk regulations on banks mean restaurants can find it challenging to secure traditional lending, but alternative lending options such as asset finance can help close the funding gap, enabling these businesses to grow.

Read more: The SME’s guide to P2P

“Most owners of restaurant businesses already have a large percentage of their wealth tied up in their company,” said Conrad Ford, chief executive of Funding Options.

“Partly because of a lack of traditional funding, they are putting more of their own personal savings at risk by injecting it back into their businesses.

“However, lending their own money to their restaurant is not the only form of funding they can turn to if bank lending is unavailable.

Read more: KPMG’s new debt advisory service could refer SMEs to P2P

“Alternative finance could be a great option for restaurant owners who are not able to secure traditional lending at rates that work for their businesses, but are eager to invest in the growth of their company.”

As Peer2Peer Finance News reported last month, Funding Options is looking to raise £5m from fresh equity investment to support its expansion plans in 2017.

The firm plans to use the £5m to develop the platform’s technology, grow lead generation acquisitions and expand Funding Options’ physical presence across the country, which could include strengthening its network of relationship managers.