I founded The Cinnamon Club restaurant 20 years ago – that would be impossible today because of the refusal of UK banks to lend

The restaurateur Iqbal Wahhab says the UK needs a proper loan guarantee scheme for banks to break down their reluctance to lend to entrepreneurs

Iqbal Wahhab founded The Cinnamon Club with a £1m unsecured loan from NatWest (Daniel Lynch)

It will soon be twenty years since I entered the restaurant business. One of my early enterprises was The Cinnamon Club in Westminster and when I embarked upon it I had little clue about how restaurants worked.

I’d not even had a student summer job as a waiter and probably would have been pretty rubbish at it if I had – think Basil Fawlty.

So when I tell the many aspirant start-ups in this sector whom I’ve mentored over the years that, despite my complete lack of management pedigree, I raised £2.5m to get it going, their jaws drop. And they drop to the floor when I then tell them that NatWest lent me £1m of that, unsecured, at 2 per cent above base rate.

The bank and my investors all did very well out of The Cinnamon Club, as they did with my second big play with Roast in London’s Borough Market.

Yet for the next venture I’m planning, I’m not involving debt because, despite the millions of pounds in profits those earlier businesses generated, banks have a red alert against lending to restaurants, especially new ventures.

That’s OK for me now but how does the young start-up get going? If you come from well to do backgrounds, there’ll be family money to get you going. If you don’t (as was the case with me) then I’m afraid the odds are against you.

It reminds me of the Mungo Jerry song In The Summertime: “If your daddy’s rich, take her out for a meal. If you’re daddy’s poor just do what you feel.” A lot of the cool, hipster brands we all enjoy so much are set up with trust fund money.

Not only is this a far cry from the level playing field that businesses in a decent society should flourish in, it means banks are missing a trick. Especially right now as our high streets, which even a year ago were flourishing with big brands from Jamie’s Italian to Cau to Carluccios, are now becoming boarded up ghost towns.

I hope the private equity firms that financed those rapid roll-outs only to find that the public didn’t actually want most of the samey “cookie cutter” restaurants they were throwing huge sums behind, now revisit their investment models.

Restaurants are not widgets that you can just keep churning out automatically. Landlords loved these guys because big brands could pay big rents. Or so they thought. Those landlords will now see their properties lying empty. Unless, that is, they fundamentally rethink how to retain value in their spaces.

There are restaurants which have closed despite £1m plus investments on their interiors in good locations which they are now struggling to even give away free or with tiny premiums. Their owners are still on the line for the rent and rates. I imagine thousands of restaurant workers have lost their jobs in the last year from the closures and after Christmas we’ll no doubt see many more establishments shut up shop. Producers and our supply chains will struggle too.

Governments and banks aren’t particularly well known for fresh thinking, but if they embraced it, they could provide much-needed lifelines to the start-up entrepreneur.

It is now possible to build a restaurant in a good area for a fraction of what a Roast or a Cinnamon Club cost twenty years ago. But it requires a partnership accord whereby landlords slash their rents to keep their properties occupied and business rates holidays from HMRC for new projects. Finally, we need a proper loan guarantee scheme for banks, to ease their fears on lending to first timers, who in turn will likely employ people on benefits.

We need these reforms – otherwise our high streets are not going to re-invent themselves or serve their local communities.