The finance your B&B needs
The bed and breakfast sector in the UK is growing - but it remains highly competitive, and funding will be key for your success.Speak to one of our experts020 4525 5312
- Payments geared to your turnover
- Adverse Credit – no problem
- No Income Proof Required
- Repayment and interest-only available
Finance For Property
- Terms up to 20 years
- £50,000 – No Maximum
- Rates from 2% over base rate
- Up to 80% Loan to Value available
- Answers for all types of challenges
- Solutions tailored to your needs
- Arrangements tailored to your circumstances
- Assets, cashflow, growth capital
The bed and breakfast sector in the UK is currently worth at least £2 billion per year. However, the competition is fierce, and the coming of new services like Airbnb means that the traditional bed and breakfast must up its game. Access to the right funding can be key to delivering high standards - and building a profitable business
Table of Contents
The high cost of overseas travel means that many more people are holidaying in the UK. Touring the country or a family holiday at a resort has grown in popularity, and many people are opting to stay in B&B accommodation.
Cost may be a factor for some guests, but many prefer the personal touch that only a B&B can offer.
Of course, there are challenges. Standards have increased across the industry and guests expect hotel standards of cleanliness, catering and style. Most successful B&Bs have so many guests that they need constant upkeep to ensure they look immaculate. There will be costs, including business rates and insurance, cleaning and laundry to arrange.
You will also need to invest in marketing and supplies that come in with each guest that does arrive. Your own website and a subscription to a wide range of directory services such as Tripadvisor will be essential.
Funding your B&B
At Rangewell, we know the financial challenges you face when you setting up, buying or operating a B&B – and the ways to provide solutions for them, including:
- Setting up a B&B
- Buying a B&B
- Refurbishing and maintenance
- Funding for assets
- Working Capital Finance
- Merchant Credit Advance
- Tax Loans
- Dealing with problems
Setting up a B&B
Most B&B operators work from their own home. The more lettable rooms you have, the greater the prospects for profit you can enjoy.
Eight or more rooms may be ideal. However, even if you own a suitable property in a popular location you will probably need to obtain planning permission from your local District or Borough Council, as this may be regarded as a ‘change of use’ of the property. The planning committee may take into account whether there are already other B&Bs operating in your area. You may also need to make costly changes to meet fire regulations, with escape routes and possibly external fire escapes. And unless yours is a very small operation, it will make sense to install a commercial kitchen.
Unless you own your home outright, you may need to arrange a Commercial Mortgage.
Find out more about commercial mortgages.
Buying an existing B&B
Buying an existing B&B could provide an alternative to starting up. It means you have a business which is already operational, and with a trading history which lenders will be able to see, making it easier for them to approve lending.
The purchase price will reflect the kind of occupancy rates, turnover and profits the business is currently generating, but the main cost will be that of the property itself. A Commercial Mortgage might provide the most appropriate solution.
Find out more about funding to help you buy an existing B&B business.
Refurbishing and maintenance for your B&B
Your business will depend on the quality of the experience you provide for your guests, so you will need constant constant maintenance and regular refurbishment. It may be necessary to call in contractors who can l work to very high standards in the shortest possible time, and any emergencies, such as problems in the kitchen, will require a rapid call out to avoid lost revenue. All this work may require funding at short notice.
You can apply for funds at any time - but it can reduce costs if you arrange a lending facility before you need it to call on it as you wish.
Find out more about funding for repair and maintenance.
Equipment for your B&B
Many B&Bs use domestic furniture, although you may need hotel-quality bedding to withstand heavy use. Character has become important and you may need to search out vintage furniture and accessories to ensure that guests enjoy a memorable experience.
You will also need to equip your kitchen to allow you to produce many more meals than usual, and provide a range of cleaning equipment.
At Rangewell we have found that Asset Finance - with leasing and Hire Purchase - can help provide most types of equipment. Plus we may be able to help arrange a single agreement to cover all your equipment needs, whether you are simply buying in some new equipment or are ready to equip a new hotel.
Find out more about Asset Finance for B&B businesses here.
Operating Finance for your B&B
The early days of any business are challenging. It may take months to start ensuring high occupancy rates and enjoying real profitability. The bills will still be coming in, even if guests are not. Your occupancy may also be highly seasonal, and during the off-season, you may need a source of income.
You may be able to arrange a short-term loan to provide working capital for slow periods. An alternative may be Revolving Credit Facilities which bring a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds for the short term.
Another alternative may be Merchant Cash Advances. If you take payments through a card terminal or PDQ machine, a lender can work with your payment company, and make a cash advance which is then repaid by them intercepting and deducting a pre-agreed percentage of the payment every time that a customer pays by card.
We can work with you to help you find the finance you need to answer your B&B operating finance needs.
Insurance cover for your B&B business
Conventional household insurance will not be suitable when you are running a business. Specialised premises, contents and public liability cover will all be essential in your business, but there are a number of ways to provide for the costs. Find out more about funding for the costs of insurance cover for your B&B business.
Tax Loans for B&B businesses
Tax is an issue for every business. As soon as your turnover passes £81,000 a year, you will be liable for VAT - and a large quarterly VAT or annual tax demand can cause problems with your cashflow, particularly if it falls in the slow season of your B&B business
Funding is available to let you spread the cost of your tax demands into affordable monthly payments in line with your cashflow. This will help ensure that your business avoids cashflow problems, and can free up cash for use elsewhere.
Find out how a specialised Tax Loan can mean result in better control of your cashflow with fixed monthly payments.
Dealing with problems
Any business can run into financial difficulties. A cashflow problem can be triggered by a seasonal downturn or even equipment packing in, and discovering that you cannot meet your immediate commitments could mean that the problem only escalates.
At Rangewell, we know the solutions which can help your business deal with such a challenge. We can help provide appropriate funding solutions if your business has run into difficulties - and even if you have a damaged credit history or CCjs, we know the lenders which can help.
Find out more about finance for B&B businesses facing financial difficulties.
Why you need Rangewell to help capitalise your B&B business
Working in the hotel sector means that there are many lenders who will be happy to lend to you. But not all lenders will be able to offer you the most competitive terms.
We know the lenders who can offer the most competitive rates for businesses in the property sector for all types of finance, including Unsecured and Secured Loans, We can even help you find Alternative Funding, using the new breed of loan providers and innovative funding solutions.
So whether you have a straightforward finance need or actually require a more complicated ‘Jigsaw’ Funding plan made up of a combination of different finance products, we can work with you to find the answers that are right for you and your plans for the future.
Whether you're looking for funding for your B&B or guest house finance, call us now and get our experts working for you.
REAL EXAMPLES OF WHAT WE CAN DO
Find the most competitive loan to help a retiring couple buy a B&B
Help a new B&B owner completely refurbish a property
Help a small business provide a fire escape to meet building regulations
Find the most competitive finance to allow the owner of a historic country house convert and equip their premises as a B&B
Help arrange an Overdraft Replacement to help a small business deal with the slow season
Discover our range of finances
Every type of finance for every type of business
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.
Helping you build your profits
Lending tailored to your B&BAt Rangewell we can help you find the most appropriate finance for any funding need your B&B may have. We can save your business money and help you move it forward.
Helping you buy premisesStarting a B&B can be a major cost if a new property is required. A Commercial Mortgage can provide the level of funding required.
Building a more profitable businessThe success of your B&B depends on the facilities and services you can offer. The right funding can provide the level of accommodation your guests demand
How Asset Funding reduces riskMost lending must be ‘secured’ on an asset of some form that the lender can remove from your possession if you don’t keep up the payments. If your B&B was unable to make the payments on any Asset Funding agreement, the lender could simply repossess it to cover their loss and non of your other assets are at risk.
A full range of fundingYou may need a range of funding to set up and build your business. At Rangewell, we can help you find the solutions you need, from Commercial Mortgages to Asset Finance, and more.
Specialist lendersSome funding providers specialise in particular sectors. At Rangewell, we can help you find the most appropriate lenders for your B&B business.
Download Rangewell’s free and detailed guide to Finance for Hotels and Motels
What types of finance are there and which are the most appropriate for the hotel sector?
Find out why not all providers are equal and why it will save you money by finding the one that’s right for you
The downsides to certain finance solutions for the hotel sector and how you can avoid them
How to arrange the finance your hotel business requires, including support on what paperwork you need
Key finance terms explained so you can make the most appropriate choice for your hotel