Demand for hospitality and retail funding surges in 2026

High street businesses across the UK are increasingly turning to alternative finance as economic pressures mount, with new data from 365 Finance revealing a sharp rise in demand from the hospitality and retail sectors.

The Soho-based lender reported a 43% year-on-year increase in restaurants opting for revenue-based finance in the first quarter of 2026, compared with the same period in 2025.

Pubs and bars also saw strong growth, with successful funding applications rising by 39%.

The surge comes as businesses grapple with rising costs, including inflation, energy bills, business rates, increases to the National Living Wage and higher employer National Insurance contributions. These pressures are driving more SMEs to seek flexible funding options to manage cashflow.

Revenue-based finance, which allows repayments to fluctuate in line with customer card sales, has emerged as a popular solution for businesses facing uncertain trading conditions.

The trend extends beyond hospitality. According to 365 Finance, the total volume of funding issued to food-related retail businesses rose by 42% year-on-year, while other retail SMEs saw a 34% increase in funding.

Matt Sparrow, Sales Director at 365 Finance, said the figures highlight the growing strain on high street operators.

“The numbers speak for themselves – high street businesses are under enormous pressure right now, and many owners are looking for smarter ways to stay afloat and keep growing,” he said.

He added that flexible funding models are helping businesses adapt to volatility. “Repayments move with their sales, which means businesses can breathe a little easier even when trading is unpredictable.”

The data, based on internal figures comparing Q1 2026 with Q1 2025, underscores the continued reliance on alternative finance as SMEs navigate a challenging economic environment.