See Johnny run!!!

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We have begun to explore financing options for purchasing a B&B..(after we sell ours). 

It's funny how lenders "run" at the mention of a B&B!! Some don't even bother to call you back! And if they do and you mention you'd like to 'start up' a B&B THEN they REALLY run! even tho we have experience! (yes, we found a place and it'd be perfect with a few modifications, and its currently empty. We started this one up, so we know whats involved). 

Not one has taken an application yet, not one!! It's SOOO  weird! I knew it'd be difficult, but Really??? 

I have spoken with two Representatives from the SBA who should supposedly help you with a business loan... yeah.. NOT! They are all about loaning for business... until you mention those two evil letters!

It's the weirdest thing ever! You'd think we were trying to bring some evil enemy into the country to start a business!

 

 

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gillumhouse's picture
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This was on the PAII Newsletter - in case it helps 

http://www.prairiebizmag.com/event/article/id/15378/

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And did you note...30-50% down as well? so who can get an SBA loan?

gillumhouse's picture
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I did a quick read and posted it as an info of what was being looked for, not as an avenue of funding. The BOB loan was a possible funding source.

Aussie Innkeeper's picture
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Contact Rick Newman at www.innfinancing.com. If there's anyone lending money out there, he'll find them for you! 

Helped us immensely with our re-finance last year. Not even our OWN bank, the one who had held the mortgage on this property for over 50 years, would re-finance us. Rick helped.

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Aussie Innkeeper wrote:

Contact Rick Newman at www.innfinancing.com. If there's anyone lending money out there, he'll find them for you! 

Thanks! I'll look him up!

Joey Camb's picture
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I find it especialy weird as when I was buying they were handing out money like drunken sailors!

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camberleyhotelharrogate@yahoo.co.uk wrote:

I find it especialy weird as when I was buying they were handing out money like drunken sailors!

and yes, the reason our economy is in such a mess and so many thousands houses sit rotting with no occupants. Come to think of it, perhaps they were drunken sailors handing them out?

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Breakfast Diva's picture
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If it's a private home now, can't you purchase it as a home (of course checking all local regulations), then after closing do the b&b thing? I don't know if mortgages have changed a lot recently, but that used to be a thing you could do legally.

Also, have you checked with any local small banks? Sometimes they are more invested in the community and are willing to lend if they don't have a large % of their funds in lodging properties. It's a tough road right now!

Highlands John's picture
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Slightly different in the UK as a B&B with 6 or less guests still counts as a domestic property, I know, but that's what we did. Told the bank I was keeping my job down south.

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Breakfast Diva wrote:
If it's a private home now, can't you purchase it as a home (of course checking all local regulations), then after closing do the b&b thing? I don't know if mortgages have changed a lot recently, but that used to be a thing you could do legally. Also, have you checked with any local small banks? Sometimes they are more invested in the community and are willing to lend if they don't have a large % of their funds in lodging properties. It's a tough road right now!

We have thought of doing that. It is zoned for B&B use. We'd have to buy the home and then get a business loan to 'make it into' the b&b. (its 10,000. sq ft with only 4 bdrms!) We'd add a few more bd rms and innkeepers quarters... AGAIN tho... we'd have to get a 'business loan for a "B&B". without knowing for sure that we CAN do that, I don't want to have a 10,000 sq ft home! 

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Sunshine wrote:

Breakfast Diva wrote:
If it's a private home now, can't you purchase it as a home (of course checking all local regulations), then after closing do the b&b thing? I don't know if mortgages have changed a lot recently, but that used to be a thing you could do legally. Also, have you checked with any local small banks? Sometimes they are more invested in the community and are willing to lend if they don't have a large % of their funds in lodging properties. It's a tough road right now!

We have thought of doing that. It is zoned for B&B use. We'd have to buy the home and then get a business loan to 'make it into' the b&b. (its 10,000. sq ft with only 4 bdrms!) We'd add a few more bd rms and innkeepers quarters... AGAIN tho... we'd have to get a 'business loan for a "B&B". without knowing for sure that we CAN do that, I don't want to have a 10,000 sq ft home! 

If you bought it as a house, why would you need a business loan to add the bathrooms, etc. Couldn't it be just a home improvement loan?

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yes, but a business loan from SBA would be better rates and terms generally speaking. 

gillumhouse's picture
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I do not know if this is just something in the PA, OH, WV, DE area but check into this. 

The Federal Home Load Bank of Pittsburgh has a loan program called Banking on Business. The BOB loans have a good interest rate (although it WILL increase but not as bad as the balloon loans) and I had one year TOTALLY interest AND payment free. That is how I got the money for my roof and my car. One of the banks in town is a member of the FHLB. See if they have one in your area. I do not think you can use it to acquire (unless it is adding on maybe) but it can be used for things needed for the business (roof and car). So if you could get a residential loan to BUY the house and open it as is as a B & B and then get the BOB loan to expand. First see if they even have BOB loans where you are looking.

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gillumhouse wrote:

I do not know if this is just something in the PA, OH, WV, DE area but check into this. 

The Federal Home Load Bank of Pittsburgh has a loan program called Banking on Business.  First see if they even have BOB loans where you are looking.

I'll check into it. Thanks!

gillumhouse's picture
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Fat fingers and late - that is Federal Home LoaN Bank.

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Does anyone know of anyone who ever got an SBA loan. Everyone talks about them, but imhave never found anyone who got one.

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Tell us all something we don't know....sorry..but there is no financing out there for  B& B's...unless you have 50% down maybe????crying

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EmptyNest wrote:

Tell us all something we don't know....sorry..but there is no financing out there for  B& B's...unless you have 50% down maybe????crying

yeah, they want a hefty down AND they want "OUTSIDE" income equal to the payments! On a $1million loan, having to run the B&B FULL + time, how on earth are you supposed to bring in that much additional outside income, (legally)!!  

It's CRAZY out there right now. 

Madeleine's picture
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This is one reason we extended our 10 year plan out to 15 years.

What I have heard the going rate for B&B's is - 5 x your gross income. That's what buyers are being told the business is worth and to not pay more than that. So, for us, that translates into a loss if we sell. (Obviously we overpaid!) So, we keep on plugging away. We'll sell once we are able to collect retirement. That way we won't have to get other jobs after this.

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10/07/2008

Yes. This is why we are still for sale. There is no financing avail.

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oh... it's available... just not to Hospitality!! Hey... is that discrimination???  enlightened Hey, Maybe we could sue and then we'd not have to get a loan! LOL! 

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Sunshine wrote:

oh... it's available... just not to Hospitality!! Hey... is that discrimination???  enlightened Hey, Maybe we could sue and then we'd not have to get a loan! LOL! 

I thought we were speaking of B&B's. There is no financing avail,it is not discrimination, it is dollars and cents. Financing would only be "your down payments needs to be the equivalent of the home & land value" and even that is not out there at this time. Banks don't want any more homes.

Joey Camb's picture
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its cos we are too small to be run viably by the bank if we go bust ie large hotel they can appoint a general manager to run it for them increasing value till they sell it - a B&B - just isn't worth getting a manager in they just shut it and sell for what they can get

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07/23/2008

Sorry JB, we were talking B&B's. I was just trying to make light and be funny. Sorry for throwing you off... 

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