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Hospitality grants are money offered by governments, councils or organisations for specific purposes. They are usually competitive and tied to project goals or eligibility rules. In hospitality, grants often aim to boost tourism, improve sustainability or help local economies. Key sources include government schemes, local authority programmes and industry/charity initiatives. Loans give you capital now in exchange for scheduled repayments with interest. Unlike grants, loans must be paid back, but they are much more flexible and widely available.
In 2025, the UK has both government‑backed loan schemes and commercial loan options that hospitality businesses can use.
The UK hospitality sector (restaurants, pubs, hotels, cafes and related venues) is a critical part of the economy. In 2024, it counted about 173,500 businesses (ONS) (99.6% of them SMEs) and employed roughly 2.7 million people (ONS). Together they contribute on the order of £90+ billion to GDP (ONS). Yet rising costs, high inflation and changing consumer habits mean many hospitality firms need investment to stay competitive.
For example, a January 2025 report noted total footfall was down 2%, with restaurants hardest hit (−7.7%) (CGA). In this climate, funding, whether as grants (non‑repayable aid) or loans, can be vital for renovations, energy upgrades, new equipment or expansion. But grants and loans work very differently. Understanding what hospitality grants and loans are available in 2025 can help business owners choose the right option.
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Key takeaways
- Grants offer non-repayable financial aid in the form of competitive funding for specific projects like sustainability upgrades or tourism development, but they’re limited and require detailed applications through government, council or industry programmes.
- Loans provide flexible, faster access to capital, with options such as the government‑backed Growth Guarantee Scheme or traditional bank lending – though repayment and interest costs must be factored in.
- Combining grants and loans can maximise funding potential, helping hospitality businesses bridge investment gaps, manage cash flow, and confidently grow with expert support from loan specialists such as Rise Funding.
Hospitality grants available in 2025
Here is an overview of the best hospitality grants available in the UK in 2025:
Government and devolved grants
National and devolved governments periodically run schemes that hospitality businesses can tap into. In England, VisitBritain/VisitEngland have offered Tourism Recovery grants in recent years for hotel and visitor projects, often awarding capital funds for development or sustainability. More recently (2025), the UK Government launched the Growth Guarantee Scheme, which is actually a loan guarantee but replaces the old Recovery Loan Scheme.
Another example: the Plan for Change initiative funds energy and carbon-reduction improvements, under which about 600 pubs and restaurants received free energy-saving advice, saving an estimated £3 million on bills. (While the advice itself is free, any physical upgrades might come with separate grants from schemes like UKSPF or local green funds.) Welsh and Scottish governments also occasionally offer targeted tourism or “green” grants (for example, grants for energy efficiency or digitalisation); businesses should check the latest on Gov.uk or devolved administration sites.
Local and industry grants
Local authorities have discretionary Business Recovery Grants or Neighbourhood/Levy grants that often benefit hospitality firms. For example, after Omicron in 2021, councils distributed one-off grants to pubs, cafes and hotels (up to several thousand pounds per premises) (LGA). Similar schemes continue under different names – in mid‑2025, councils are using £600 million of “Levelling Up” and COVID recovery funding to assist businesses (gov.uk). Eligibility typically requires being in the hospitality sector (pub, B&B, restaurant, etc.) and solvent.
Councils also run Green Hospitality Funds or Energy Efficiency grants locally (e.g. a pub retrofit fund, or support for low-carbon heating), so it’s worth consulting your council’s business support pages. Industry bodies sometimes offer small grants too – for instance, the licensed trade associations or tourism boards may run competitions or hardship grants for members. Even some private programmes (e.g. Airbnb’s “Best of British” fund, offering up to £100,000 for rural hospitality projects) can be relevant. Note: charity grants (like from Hospitality Action) exist, but these usually aid hospitality workers in personal crises, not businesses.
Loans for hospitality businesses
Here is an overview of the loans available to hospitality businesses in the UK in 2025:
Government-backed loan schemes
The main public support now is the Growth Guarantee Scheme (GGS), launched in July 2024 as a successor to the old Covid-era Recovery Loan Scheme. The GGS provides a 70% government guarantee on loans up to £2 million, making banks more willing to lend. It covers various products (term loans, overdrafts, invoice/asset finance).
Eligible UK SMEs (trading for less than 2 years, with less than £45 million turnover) can apply for up to £2 million under the GGS. This scheme is open via accredited lenders – you can apply online through many business banks or use a loans specialist like Rise Funding to tap into it. Note this is a loan guarantee, not a grant, so funds must be repaid; its advantage is easier access and quicker approval.
Other smaller schemes exist too: for example, some councils and devolved governments run Gap Funding Loans or SME Growth Loans for projects like rural tourism infrastructure. Also, the government’s Help to Grow: Digital scheme is a 50% discount on software, which isn’t cash, but reduces investment cost.
Interested in government funding for your business?
At Rise Funding, we help businesses of all sizes find the funding they need.
We act as your long-term partners and help you compare lenders, rates and fees, advising you every step of the way.
get instant quoteTraditional bank and lender loans
All major banks and many finance providers offer standard business loans and overdrafts to hospitality firms. Interest rates are currently higher than in the last decade (e.g. mid-single-digit %), so costs matter.
The British Business Bank notes that many more lenders now serve SMEs, not just the big five banks. Small business lending volumes dipped slightly in 2023 due to higher borrowing costs (BoE), but facilities are still available. New businesses (less than 2 years old) may be seen as higher risk, especially in a seasonal sector, but banks will consider factors like turnover, profitability, and credit history. To apply, you’ll typically need 6-12 months of bank statements, accounts or tax returns, plus an explanation of how the loan will boost revenue.
Secured vs unsecured
Smaller loan amounts (less than £50,000) can often be unsecured (no collateral) if your business is sound. With the right business, an unsecured loan could be as much as £500k. For larger projects (refurbishing a pub or expanding a hotel), secured loans (e.g. a business mortgage or debenture) may be used, using property or assets as collateral. Secured lending usually gets you larger sums and longer terms, but adds risk if things go wrong.
Other finance
B2B businesses issuing invoices also use alternatives, such as invoice finance (to unlock cash tied up in unpaid bills) or asset finance (to purchase equipment, furniture, or vehicles over time). These are technically loans secured on invoices or assets.
There’s also a merchant cash advance (advanced payment on future card sales), which can be an effective solution. The rates can be high, but in some cases the same as the rest of the unsecured market. Merchant cash advances work well for this sector as repayments fluctuate depending on how the business performs, so they can be great for seasonal hospitality businesses.
Loans with Rise Funding
At Rise Funding, we can greatly simplify the loan process. Using us can save time (one application gets sent to many lenders) and protect your credit score. We can also bundle your application professionally, increasing approval chances. For example, our business loans marketplace allows hospitality firms to compare offers quickly and get support at every step. If approved, we promise decisions often within 24-48 hours and funding soon after.
Grants vs Loans: What’s the difference?
Choosing between a grant and a loan depends on your situation:
Cost
Grants are free (no repayment, no interest), so if you qualify, that’s the cheapest funding. Loans incur interest and fees, so you pay more over time. (UK interest rates for small business loans in 2024 were typically 6–10% APR, though this varies (BoE)). Non-high street banks can have more favourable rates, such as Funding Circle offering around 16%.
Flexibility
Loans can be used for almost any business purpose (expansion, stock, cash flow), whereas grants usually have strict requirements (e.g. for green upgrades, training, or specific development projects). If you need cash for general working capital, loans are more accessible.
Availability
Grants are competitive and limited. Many hospitality businesses find it hard to secure grants unless their project exactly fits the criteria. In contrast, loans are widely available to viable businesses – 50% of UK SMEs reported using external finance in late 2023.
Repayment risk
Grants have no repayment risk. Loans must be repaid even if your business is slow, so borrowing adds a financial commitment. (This was highlighted by past pandemic loans: only around 13% of Bounce Back Loans were fully repaid by early 2025.)
Approval speed
Some grants have long application processes and waiting lists. Many loan providers can offer decisions and funds in days or weeks.
In practice, many businesses use both: they apply for relevant grants while planning to borrow any shortfall. For example, a restaurant might secure a local council grant for outdoor seating and then take a small loan for interior refurbishments. It’s wise to explore every grant, since they lower your overall funding needs, but also be realistic about loan qualifications.
Start a loan or grant application for your business growth
In summary, 2025 offers a mixture of funding choices for UK hospitality: ongoing grants from government and local bodies (especially for green or growth projects), plus a range of loan products (from the new Growth Guarantee Scheme to traditional bank loans and invoice finance). Hospitality businesses should research both routes. Grants are effectively free money but hard to get, while loans are easier to access but create future obligations. Start by assessing your needs, preparing a solid business case, and then apply systematically for each suitable grant or loan. With careful planning – and expert guidance if needed – you can secure the funds to invest in your pub, restaurant, hotel or cafe with confidence.
To discuss your options, whether it be a business loan, cashflow funding or others, you can call one of Rise Funding’s experts for individualised advice. Contact us through the form below, or get an instant business quote by completing our online questionnaire.
