The Peppered Pig, which is owned by the Mitchell family, has redeveloped its rural site, allowing for extensive building renovation.
The funding from HSBC has supported the development of an extended dining space, a refurbished function room and six ensuite rooms.
The Peppered Pig is a modern British inn situated near the historic market town of Snaith.
Turnbridge Day Nursery also operates from the site, under the same family ownership.
Development across the site has enabled the nursery to integrate three separate buildings under one roof.
The refurbishment is expected to create 10 new jobs.
Glen Mitchell, co-owner of the Peppered Pig, said: “We provide a unique service for our customers across the region and beyond. The local community is always very supportive of our endeavours, whether that is offering a fine dining experience or childcare services.
“It has been really pleasing to become known as destination hotel and restaurant which attracts people to the local area.”
The business was set up in December 2009 by Sam Mitchell and her husband Glen. Mrs Mitchell always hankered for a little restaurant of her own.
“My parents have been in the pub trade so I grew up in pubs and restaurants and I’ve always had an interest in food,” Mrs Mitchell said.
The couple set up the nursery after struggling to find the right childcare for the their eldest son back in 2013.