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Are there grants available for starting a tourism business?

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WaverlyWannaBe

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Hi,
here's our story. my husband and I would like to purchase a property. The property is absolutely lovely and in the best location for a guesthouse. It's my dream home and dream business to be perfectly honest.
Unfortunately, the price is out of our comfort zone right now as my husband and I are both self-employed.
So, after touring the place, I was absolutely beside myself to find that there was a 2-br 1830 guesthouse on the 1.5 acre property that could be restored as a working guesthouse. Granted, w/ two bedrooms it wouldn't be a huge moneymaker but it would be a fantastic little side business for me, a self-employed artist and work at home mom.
I immediately began researching funding for the project, contacting all sorts of government agencies regarding grants for women owned businesses or low interest loans. I'm currently reading pages and pages of documents. My first question is, "are there indeed grants available for this type of project?" I'm told there are grants for businesses and also low interest loans. We need to find the money to purchase the property and unfortunately we don't have any rich aunts or uncles to load the money to us.
We met our next obstacle when my husband spoke to a person on the zoning board. Much to our dismay, the property is not zoned for any type of guesthouse, inn or b&b. But we were told we could apply for a variance but most likely it would be denied. I wonder whether all of these hurdles are a sign that it wasn't meant to be. I'm a persistent person who isn't ready to give up just yet? A few days later, my husband spoke to a friend on the board of supervisors and he thought it was a great idea and said he would speak to the zoning people. So there is a slight possibility that we would be granted conditional use but we're not getting our hopes up.
Just for curiosity, have you encountered similar problems with your own b&b businesses? If I may be so bold, how did you finance your businesses? I'm particularly interested in whether you were awarded grants.
Now, you might ask if we could get some kind of historic preservation grant and the answer is probably not. We would be precluded from restoration grants because although the main residence was built in 1850 and the guesthouse was built in 1830, it is not on the historic register. But, still is there some other type of historic grant I could go after?
The bottom line is we simply can't afford it unless we are really financially creative. But, if we all were to wait until we had that million stashed away, there would be very few new businesses.
Here's our plan. We would live in the main residence, a 4-bedroom Victorian with our two young boys and rent the guesthouse. It might sound ridiculous to rent the building w/ the least income potential but the guesthouse wouldn't be large enough for our family. I don't want a large-scale inn or b&b at this point. The other outbuilding would be my art studio.
My husband said we need to purchase the property with low interest loans and grants and then work on the guesthouse.
Sorry for rambling...there's so much more to say but I'll stop for now. Any advice would be greatly appreciated.
 

swirt

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Hi WaverlyWannaBe and welcome to INNspiring.com I can't say as I'm any kind of grant expert, but I have seen grants that mainly tie into barn repair and items related to historical building repair and things like that. There may be economic incentive grants that are more location specific. (For example their were grants made available to wineries in this area who wanted to update their website to include eshopping carts.) You'd have to research it well for your particular area.
There are some binding tie issues with historic properties so you may want to research that well before choosing that as an option.
You will likely need outside income of your own as a two bedroom guest house is not likely to turn a large profit. The good news it that it is something that could be managable. 3 and 4 is really where the tipping point arrives where it has the potential to support a person (1 person). When you get to 5 then it turns a profit but you are likely to need to hire additional help...or be selective about how often you open up all 5 rooms.
A small local bank may look at a 2br guesthouse as a legitimate partial revenue source, but my guess is that larger banks would not count it too much toward you income stream for determining the amount of a mortgage you could qualify for.
There are a few innkeepers on here who have done things similar to what you are describing (not including the grants) so I would wait for their input before you go making plans related to just what I have commented on.
 

YellowSocks

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Welcome to INNspiring!
I had a wonderful reply post all typed up, but somehow it's gone... I'll redo it tomorrow.
=/
Kk.
 

gillumhouse

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There are low interest loans available through the SBA BUT not to purchase a property or business and if the Zoning is not in place already, walk away. This property will not do it. You cannot take what one person says - even if they are on the Commission - and count on anything. There was a case in Joliet, Illinois about a year and a half ago - the neighborhood fought it, they won an OK from the Zoning Board but the City Council said NO! End of story - they invested a lot of money restoring a lovely property that they could not open as a B & B. Not to throw cold water on your dream, but you do not have the money to buy the property - how will you fund all the extras it takes to make a B & B?
You have a 4-bedroom house that you want for you and plan to use the 2-bedroom guesthouse for the business? The business person in me says with 2 boys, the guesthouse has a bedroom for you and a bedroom for the boys - you have your priorities backward in my not very humble opinion. We are realists here. I am one who looks for ways to succeed and this - as you have explained it - sounds very no-go. A 4-guestroom B & B would have a chance to make it. I have 3 and the house does (usually anyway) what I expect it to do - pay the expenses of the house. IF there is profit, it is minor and only because the business is operated by slaves - meaning no paychecks are written to the people who run it - ME and I have a dishwasher who works for the priviledge of sleeping with the owner (my husband). Even one salary would have bankrupted us.
I started my business with my own funds. We refinianced a house to get the money to pay cash for this one and then sold the first house a year later. The only way we were able to survive was that we did not have a mortgage. The honking loan payment came 10 years later - which is how I know about the low interest loans. I got the loan because of my track record as a business.
 

JunieBJones (JBJ)

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Welcome to the forum. Banks are not very nice right now. Even 5 years ago when we bought our place we had to PROVE that it would make money and it was an existing B&B. There were a ton of hoops to jump through. SBA loans are the hardest to get. If you had a reasonable income - ie you have been in your current employment for a regular amount of time, ie a few years solid, then they will use that to back the loan on this "risky" venture of yours. But being self employed, as you know, has its pitfalls in this arena.
The zoning is a whole other animal altogether. If you can't afford the property, that is the BIGGEST RED FLAG and I would not do this. [/h3]
 

EmptyNest

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Given the status of the economy right now, I wouldn't hold my breath looking for grants! And those that are out there that I am aware of are usually partnerships between a town and some local businesses. You have GOT to have some of your own money as well because most grants require some sort of matching funding. Realize no one is going to give you a free pass to open your business. Start saving NOW!
And don't do ANYTHING until ZONING is a done deal or you will regret it for sure.
 

Samster

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I agree...ZONING is the deal breaker here. You don't want to fight an uphill battle on that, especially if the neighbors are not supportive.
There are some grants out there for restoration of historic properties but usually it's to restore property to its historic status, not to renovate for a business. But, check into your State's Historic Preservation Tax Credits which can be substantial. Check with the National Trust also.
 

muirford

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We are in a historic town, where the entire incorporated town is considered the historic district and there are strict zoning and planning ordinances. I can only tell you that in this town, one person on the planning board would not be enough to sway the entire commission to grant a variance. You may be able to get support from the town IF there is something in it for them - like hotel/motel tax money - but in our town there is a planning commission, a historic landmarks commission and a board of zoning appeals - all of whom are different people from the town council, and not very willing to endorse variances. In my own experience, changing a lot line - moving the bisecting property line on two adjoining parcels that we owned from perpendicular to the street to parallel to the street - costs us $5000 in attorney's fees. Never mind that the existing property line split the historic house on the two lots in half.
People in our town have got grants to do preservation work on homes even in commercial districts, but they are difficult to get and extremely restrictive in terms of materials for use (inside and outside) and timing of the work. You cannot start the work before the grant is approved.
Now, every state and town are different in terms of restrictions but anything that is already stretching your budgets sounds like a problem to me. We bought a going business with a commercial loan and had no problem getting it - but we put 30% down and had a substantial cash cushion - more than one year's expenses - at purchase. As a commercial loan, it was an adjustable rate as well, which adjusted upwards the first two times. We put money into the business the first two years, and didn't take any out. I would not recommend this route for anyone who is not on very solid financial footing to begin with.
Jeanne
 

YellowSocks

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HI! Welcome to the forum!!!
When I was in Maryland there were grants available for renovating homes... but they had strings attached. A couple in my town fixed up their home, complete with repairing and patching and repainting the original wood shingles (talk about a lot of tedious work!). They added these cute gingerbread pieces to the porch. Not long after they had the gingerbread for sale because the grant people made them remove them, since they were not original to the house. So yes, money's out there (check with your state), but it has strings attached. And that was for renovation, not purchase... haven't heard of any for purchase. Also, being listed on the historic registry is usually not critical... if you can research and fill out grants you can apply and get listed, and some programs are content with an "in progress" status.
Zoning really is that big of a deal. We took a HUGE risk in buying this house... which was our second choice. The one I really thought would work nicely was zoned "R1" and the lady at zoning said "no way." When I asked her about this one, "no problem." Well, she shouldn't have said that because it wasn't a sure thing. I was able to get a Home Occupation Permit for two guests/guestrooms as a boarding house. With that I was permitted a 1 square foot sign. I went to the zoning office, got copies of all the regs, and read them all through several times. After we moved in we stuck with the two rooms until our renovations on those, and the outside, were complete. The key thing with zoning boards is that if they think the neighbors will be even a little bit unhappy then they'll never approve a variance of any kind. During our renovations we went out of our way to meet our neighbors, shovel their walks, trade cookies at Christmas, and generally be friendly and neighborly. They expressed gratitude that the house was no longer run down, the landscaping was maintained, and that we weren't "the crazy lady who thought their tree was hers." So when I was ready to go ask Zoning for four rooms and a proper sign I went to every neighbor in the vicinity and had them sign a petition saying they wouldn't mind. I'd already met 2/3 of them before I knocked on their doors, and all but one (who lives well down the street anyway) had no problem signing. I presented the Zoning board with packets that included color pictures before and after renovations, a color rendering of our (very expensive, high quality) proposed sign, a picture of our itty bitty legal sign, and the most key item, signatures of all the neighbors saying they weren't opposed. Had even one of them shown up at the meeting and expressed any doubts, there is no way I'd have received approval. As it was the Board had to show who's boss and put restrictions (add two parking spaces, install only a one sided sign closer to the house), but I got what I requested. We immediately started renovations on the other two guest rooms and gave the go ahead on the sign.
We're now (as of yesterday!) officially open with four guest rooms (and a gorgeous sign!), and believe me, 3-4 guest rooms is a lot of work. I have little boys, too (twin 4-1/2 year olds), and it's not easy doing it with kids. My first impression was that you staying in the Victorian (which, by itself, will be plenty of work to maintain) was a good plan because you'll have space and privacy, and only two rooms to have to run. But as Kathleen said, you won't make much money with two guest rooms. OTOH, if you have sufficient income from your art and your dh, then it might be a nice little sideline.
We bought ours as a residence, with a typical residential loan. We came in with the attitude that if the B&B didn't pan out at least we have a great house in a great town where we really want to live. I think you'll need a similar attitude. You are unlikely to receive financing as a business as B&B's simply aren't that lucrative, especially small ones.
Would zoning permit you to rent the guest house out as an apartment?
Are you sure your area has that much need for lodging? Even a one mile difference in location can make a huge difference in occupancy rates... are you sure you have a draw to bring people to your area?
The property itself sounds lovely, and I can see why you'd want it. My first pick (even before the one I mentioned above) was a gorgeous Italianate farm house east of town. It would have been horrible, so thank goodness it was already under contract. It was on a tiny country road, way outside of town, not near anything. We would never have been successful there. Here we get calls asking, "Are you walking distance to the Seminary?" When we say yes, even our kids could do it when they were three, we get the booking. All that to say, pretty is nice, but you have to have the numbers and location or you're only going to get yourself in trouble. As you yourself said, maybe these doors are closing to show you it's not to be.
But as a very persistent, optimistic (some say nutty) person in my own right, I don't blame you for pursuing all your options! Start with Zoning. It's crucial. No zoning, no B&B.
And good luck to you.... if this one doesn't work out, then perhaps you'll find an even better one down the road. In the meantime, keep saving your money.
=)
Kk.
 

EmptyNest

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I agree...ZONING is the deal breaker here. You don't want to fight an uphill battle on that, especially if the neighbors are not supportive.
There are some grants out there for restoration of historic properties but usually it's to restore property to its historic status, not to renovate for a business. But, check into your State's Historic Preservation Tax Credits which can be substantial. Check with the National Trust also..
Yes, but they have to have the house first!! These folks want money to actually buy it. And that ain't gonna happen

 

JunieBJones (JBJ)

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We have $20,000 in tax credits in this house. What does that do for us? ZILCH. We will pass it on the next person when we sell.
 
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