Rising demand from hospitality businesses for revenue-based finance amid NIC increases
365 Finance, an award-winning SME funder, has reported that the UK hospitality sector accounted for £43.7m of funding in 2024*, representing a 16.9% increase compared to 2023. For the first three months of 2025 this upward trend has continued, with hospitality businesses during 2024 and this year to-date being among the most frequent applicants for revenue-based finance.
With the number of advances 365 Finance approved for the hospitality sector last year up 20.6% from the previous year, this demonstrates how much these businesses are requiring extra funding in order to adapt to ongoing rising costs and changing consumer behaviour.
Now the increase in employer National Insurance contributions (NICs), as of this April, has presented another financial challenge particularly for UK restaurant owners, as the NI rate has jumped from 13.8% to 15% while the threshold has fallen from £9,100 to £5,000 – which impacts employers with part-time and casual staff.
For many SMEs in the hospitality sector, managing operating costs and cashflow will become even more of a concern over the coming months, especially with the added pressure of the recent rise in the National Minimum Wage and National Living Wage.
Warren Abbey, 365 Finance CEO, said, “It is unsurprising, given all the financial considerations currently weighing heavily on hospitality businesses, that we have specifically seen such an uplift in the number of restaurants opting for the type of revenue-based finance we can offer them.
“It’s a trend which we predict will continue for the remainder of this year, as restaurants once again find themselves having to adapt to difficult economic and market conditions – just as hotels, pubs, and bars are also having to do continually.”
According to the latest data from 365 Finance, the average size of advance applied for by SMEs in the hospitality sector is just over £29,000, with 52% of businesses funded in 2024 being repeat customers. The funder has reported surges in cashflow related funding, stating that this is the reason for 40% of advance applications.