The finance your B&B needs

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.