Amount restaurant owners are forced to lend own businesses increases

Rising costs and falling restaurant sales has meant that more restaurant owners are having to inject extra money into their businesses just to keep them afloat, with restaurant owners forced to lend £424 to their own businesses in past year, up 12% from £377m the previous year

Struggling restaurant owners are increasingly having to lend their own money to their businesses due to difficulties finding funding elsewhere,” according to Mazars, which says that high street lenders are reluctant to increase their lending to smaller restaurant businesses because of the challenges the sector faces. High interest rates have also made available loans unaffordable for many, it adds.

“Restaurant owners having to loaning more and more of their own money to their businesses is a real cause for concern. To take difficult choices like this, these business owners must feel they have no other viable way forward,” says partner Adam Harris.

“It is understandable that restaurant owners want to take a risk on their businesses, as they are often passion projects. However, loaning personal funds to your own business is not the only one option to stave off insolvency. It’s really important that business owners seek out professional advice before making that kind of commitment.”

To raise funds, owners have turned to re-mortgaging their own homes or cashing in on their investments in order to find the funds to keep their businesses going, says Mazars.

Figures from the Insolvency Service show that there were 435 restaurant insolvencies in the last quarter, a 15% increase on 395 in the previous three months.