Financing your hospitality business

Your financing options depend on the viability of your business. From your turnover, you should be able to pay all costs and repayment obligations, and also make an entrepreneurial income from it. Do you not have enough of your own money? Then start looking for financing. Research which options suit your situation.

What is your financial starting position?

Your business is liquid if you can satisfy all your payment obligations in the immediate future. You can get your payment obligations under control in 6 steps and stay on top of things:  

1. make a liquidity forecast   

2. explore the options available  

3. contact debtors  

4. assess your inventory  

5. rank your creditors 

6. analyse your personal expenditures 

Once you have a clear picture of your financial situation, you can start taking measures to improve your cash flow. 

Do you have debts? Then follow the step-by-step plan to dealing with debts before taking out (new) financing.

Setting goals

As you start out, you must determine what to do next, such as seeking funding. A financial planning and analysis will help you do this. You often make this planning and analysis with the help of your adviser. A liquidity budget instantly shows you when you fall short, plus the amount involved. You can then use this as the basis for determining your financing request. You require the funds for the following purposes: 

• Working capital for the purchase of inventories and payment of costs. 

• Business assets for essential investments in inventory, such as equipment and furniture.

• Bridging loans and liquid assets to pay off your debts. 

Government schemes

The following government scheme may be useful:

Bbz

In the event of financial hardship, you can apply for income support and/or credit through the Financial support for self-employed professionals (Bbz) scheme. Bbz provides credit up to €45,483 to businesses which have been in operation a minimum of 18 months, while more established businesses can apply for a maximum of €247,047. 

Common financing

There are several normal financing options, such as the bank or family and friends. If your application for a bank loan is unsuccessful, you can explore the option of non-bank financing such as crowdfunding or leasing.

Subsidies

Are you thinking of making your business more sustainable? You can install a (hybrid) water pump, solar panels, a solar boiler, or a small wind turbine. You can reclaim part of your investment when you apply for the Sustainable energy investment scheme ISDE.  There are a number of other grants and subsidies which may provide opportunities. 

Landlord

In some cases, the landlord or owner of the premises is willing to invest (more) in your business. Talk to them about the possibilities. 

Hospitality financiers

Be sure to explore the option of working with financiers who focus specifically on hospitality business owners, including: 

Supplier, wholesaler, or beer brewery 

A wholesaler, beer brewery, or supplier might be able to provide financing. You generally have to commit to buying your products from them. The downside is that this could limit your product range. 

Beer brewery Koninklijke Grolsch and credit provider Qredits have joined forces to help hospitality businesses. Are you a (potential) Grolsch client? You can apply for a credit of up to €250,000. Qredits (in Dutch) provides the credit against 1% less interest. Grolsch guarantees part of the credit and pays the application costs. This goes for all Qredits loans, except the flexible credit option. You apply via Grolsch. 

POS advance 

You can use your point-of-sale terminal to receive an advance on your expected turnover. Every day for anywhere between 3 to 6 months you pay a percentage of your turnover – this involves amounts of between €2,000 and €50,000. 

FinTech 

FinTech lenders harness online technology to organise the financing process. They tend to offer working capital, but in some cases they might also offer funding for renovation or business assets. The amounts involved generally run from €5,000 to €250,000 and higher. Examples of FinTech lenders that finance hospitality business owners include New10, October, and CapitalBox. 

Crowdfunding 

Several crowdfunding platforms facilitate hospitality businesses in their crowdfunding campaigns. The Horeca Crowdfunding Nederland platform (in Dutch) caters specifically to hospitality businesses. 

Investeerinhoreca.nl (in Dutch) is an independent branch of crowdfunding platform Geldvoorelkaar.nl. You can present a financing application to potential investors on this platform.

Other

The Europese Horeca Financieringsmaatschappij (in Dutch) is one of the non-bank lenders affiliated with the BMKB (SME credit guarantee scheme). This lender provides funding for inventory or for a renovation. Loans with a set or a variable rate are available. 

Tips and warning

Working on a funding application? Here are some tips: 

• Make sure your records are current so a lender can quickly assess your application. 

• Convert the interest rate to an annual rate and determine whether it is acceptable. The MKB Financiering Foundation recommends that total costs including interest should not exceed 20% per year. The Foundation has a quality mark for affiliated lenders and financing advisers (both in Dutch). 

• Compare offers from 3 lenders to make an informed decision. 

• Read the fine print of the credit proposal. In making your choice, look out for a comprehensible contract, a quality mark, and affiliation with an industry association. Lenders with a quality mark or who are affiliated with an industry association have to follow a code of conduct. That requires them to act transparently and clearly during the lending process. 

Boosting your chances of success

Use the financing flowchart to choose a form of finance in advance so as to find a suitable lender. Take a close look at your lender’s criteria before submitting an application. Adjust your operations if necessary and explore alternative options. 

Get help

Help increases your chances of obtaining financing, and with the right advisor and a good financial rationale, you will get your finance application approved in no time. These advisers will help you get started.