<h2>How do I finance a bed and breakfast business?<\/h2>\r\nAs this is a very traditional industry, the good news is there\u2019s lots of opportunities to access information and lending expertise.\r\n\r\nIf you\u2019re looking for a B&B mortgage solution, read through the information below then make an enquiry with us so we can arrange for a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-mortgage-broker\/">commercial mortgage broker<\/a> to speak with you directly.\r\n\r\nIn this article we will cover:\r\n<ul>\r\n \t<li><a href="#can-you">Can you get a mortgage for a bed and breakfast?<\/a><\/li>\r\n \t<li><a href="#commercial-or-resi">Do I need a commercial mortgage for my B&B or should I use a residential mortgage?<\/a><\/li>\r\n \t<li><a href="#secure-commercial-bb-guesthouse">How can I secure a commercial B&B mortgage for my guest house?<\/a><\/li>\r\n \t<li><a href="#trading-history-bb-mortgage">How much trading history do I need for a B&B mortgage?<\/a><\/li>\r\n \t<li><a href="#deposit-needed-bb-mortgage">How much deposit do I need for a B&B mortgage?<\/a><\/li>\r\n \t<li><a href="#other-options-available">What other options are available to finance my B&B business?<\/a>\r\n<ul>\r\n \t<li><a href="#business-loan">Can you get a business loan for a bed and breakfast?<\/a><\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li><a href="#bad-credit-guest-house">Can I get finance for my Guest House business with a poor credit history?<\/a><\/li>\r\n \t<li><a href="#bb-mortgage-expert">Speak to a B&B mortgages expert<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="can-you">Can you get a mortgage for a bed and breakfast property?<\/h2>\r\nYes. There are lenders who offer finance for B&Bs but the type of mortgage you need in this scenario will depend on <a href="#factors">several factors<\/a>, including how much of the property's square footage is commercial space.\r\n<h2 id="commercial-or-resi">Do I need a commercial mortgage for my B&B or should I use a residential mortgage?<\/h2>\r\nA commercial mortgage is the most appropriate type of lending for anyone looking to buy a property for their business or commercial activity, whereas a residential mortgage is best suited for the purchase of a property with the intention of living in it.\r\n\r\nThere are some quite clear distinctions between when to use a commercial mortgage and when to use a residential mortgage in the UK.\r\n\r\nHowever, there are a few instances where these lines can sometimes appear blurred. This is particularly the case for B&B mortgages.\r\n\r\nMost B&B proprietors also live at their guest house. So, if you\u2019re looking to buy a bed and breakfast business, do you need a residential mortgage or <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/">commercial mortgage<\/a>?\r\n\r\nThe answer comes from how much of the property is used as a commercial concern and how much is used as personal space.\r\n\r\nIf the area of a B&B property used for residential purposes is more than 40% then a residential mortgage can be used.\r\n\r\nHowever, if it is less than this then a commercial mortgage will be required.\r\n\r\nThere might also be a scenario where you need to opt for a semi-commercial mortgage due to the mix of residential and commercial floorspace the property contains.\r\n\r\nYou can read more on these in our <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/semi-commercial-mortgages\/">guide to semi-commercial mortgages<\/a>.\r\n<h3>Why is choosing the right mortgage type so important?<\/h3>\r\nChoosing the wrong product type is a fairly common mistake made by B&B proprietors but it can also prove to be quite a costly one.\r\n\r\nBecause interest rates are normally more favourable for residential mortgages than for commercial a lender may conclude that an applicant has been dishonest in order to get a lower rate.\r\n\r\nIf such a conclusion is reached a lender could call in the mortgage on the basis of a breach of covenant meaning you would need to pay back the amount borrowed. It could also make it difficult for any future borrowing requirements.\r\n\r\nThis is why it\u2019s extremely important to seek the correct advice from an experienced adviser. If you\u2019re looking at how to finance your guest house, <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-commercial-mortgage-specialist\/">make an enquiry<\/a> with us and we can arrange for a specialist to contact you directly.\r\n<h2 id="secure-commercial-bb-guesthouse">How can I secure a commercial B&B mortgage for my guest house?<\/h2>\r\nRunning a B&B has become a highly desirable career choice pursued by many, in particular, those considering semi-retirement.\r\n\r\nThe good news is, if you\u2019re looking at making the jump into a B&B business, many lenders will have the knowledge and expertise to assist with any lending requirements you have.\r\n<h3 id="factors">How do lenders assess B&B mortgage applications?<\/h3>\r\nWhen lenders review applications for commercial B&B mortgages the first thing they will want to understand is how much experience you have in this particular sector.\r\n\r\nThe more experience you have, the more favourable a lender will consider your borrowing needs.\r\n\r\nA lender will also want to know you carry all the appropriate licenses to run such an establishment. If your intention is to run a B&B business as an investment then a lender will want to know your plan for hiring somebody with the appropriate experience to manage the day-to-day business.\r\n\r\nIf you have little or no experience of running a guest house, don\u2019t panic, there are still some lenders who will consider your application.\r\n\r\nHowever, what they will want to see is a robust business plan and clearly thought out profit projections.\r\n\r\nAny business plan would need to include any renovation requirements (and how they will be funded), a detailed understanding of your local market and how you intend to succeed versus your immediate competition.\r\n\r\nThis should also incorporate any marketing plans you have to hit your key occupancy rate targets.\r\n\r\nThe busier your guest house is, the more profitable it should be and, as a result, your mortgage payments should look much more affordable to a lender.\r\n\r\nIf you\u2019re looking to secure a mortgage for a B&B business or an existing proprietor looking for possible refinancing options or to add to your portfolio, make an enquiry with us and we can arrange for a specialist in this area to get in touch.\r\n<h2 id="trading-history-bb-mortgage">How much trading history do I need for a B&B mortgage?<\/h2>\r\nMost lenders will be reluctant to approve finance for a B&B mortgage without a strong previous trading track record. The majority will want to see the previous 2-3 years accounts for the bed and breakfast business you are looking to purchase or raise finance for, however, some may accept less than this.\r\n\r\nIf you\u2019re buying a bed and breakfast business for the first time and the previous records show a poor trading record with low occupancy rates there are some specialist lenders who will consider your application.\r\n\r\nThis would be based on your ability to demonstrate a clear route to profitability under your new ownership and management team.\r\n<h2 id="deposit-needed-bb-mortgage">How much deposit do I need for a B&B mortgage?<\/h2>\r\nGenerally, most lenders require a deposit of between 20%-40% for commercial mortgages depending upon the level of risk they deem to be taking and the type of commercial mortgage requested.\r\n\r\nFor B&B mortgages most lenders will require a deposit of 40%, some will request 30% and a few will allow 25% based on the strength of the business\u2019 trading accounts, future profit projections and its location (this will have a bearing on occupancy levels) as well as your profile as a borrower.\r\n<h2 id="other-options-available">Other than a commercial mortgage, what options are available to finance my bed and breakfast business?<\/h2>\r\nTaking out a commercial mortgage isn\u2019t the only way to buy a B&B property. There are other funding options you could explore, including...\r\n<h3 id="business-loan">Unsecured business loans<\/h3>\r\nIf the amount you need to finance your B&B business is a fairly minor amount (less than \u00a325,000) it may be more viable to consider a shorter-term option such as a business loan which would not require any security for the lender and could be arranged fairly quickly.\r\n\r\nThis might be viable if you already have some capital to invest, but need more.\r\n\r\nIf the amount you require is larger than \u00a325,000 the options outlined below may be more suitable alternatives to a commercial mortgage, depending on your circumstances.\r\n<h3>Bridging loans<\/h3>\r\nIf you need to complete your B&B business transaction quickly then <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/commercial-bridging-loans\/">bridging finance<\/a> may be a solution as this form of borrowing is designed for such situations.\r\n\r\nAs the name suggests, bridging finance is a \u2018bridge\u2019 between a purchase and a clearly defined exit strategy. This could mean that by the end of the bridging loan term (usually 12-36 months) you decide to refinance your lending with a commercial mortgage or you intend to sell your bed and breakfast business.\r\n<h3>Development finance<\/h3>\r\n<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/development-finance\/">Development finance<\/a> could be a consideration if your intention is to build your bed and breakfast property from scratch or you need to fund a major renovation to the premises you\u2019ve acquired.\r\n\r\nThis type of borrowing shares some similarities with bridging finance. The key difference is that the total amount you borrow is released in staged drawdowns as the building construction or renovation takes shape.\r\n\r\nThe benefit of using development finance is that you only pay interest on the amounts that have been released to you and you can build the B&B to your own specifications (assuming you have the means and expertise to do so).\r\n<h3>Releasing equity from other properties or assets<\/h3>\r\nIf you already own a large portfolio of business properties (or assets) you could also consider releasing the equity from within this portfolio to fund any future purchases.\r\n\r\nThis option would negate the need for any significant cash outlay for a deposit as would be the case for a commercial mortgage.\r\n<h2 id="bad-credit-guest-house">Can I get finance for my Guest House business with a poor credit history?<\/h2>\r\nA <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/bad-credit-commercial-mortgage\/">poor credit history<\/a> can, no doubt, cause problems with how much a lender may be prepared to lend you for a guest house commercial mortgage, depending on the type of issue you\u2019ve had and when it was registered.\r\n\r\nIn short, clean credit isn\u2019t always a must for commercial lenders but it could help you get the best guest house mortgage rates.\r\n\r\nSome lenders might offer unfavourable rates or turn the borrower away if there\u2019s bad credit on file, but there are specialist commercial lenders who cater for individuals and businesses with various forms of bad credit.\r\n<h2>Why you should speak to a commercial mortgage broker<\/h2>\r\nAt Online Mortgage Advisor we can offer you a first-class service tailored to your own specific needs with access to the most experienced brokers available that:\r\n<ul>\r\n \t<li>Have whole of market access<\/li>\r\n \t<li>Have excellent relationships with B&B lenders<\/li>\r\n \t<li>Can offer bespoke advice to customers who are in the market for a B&B<\/li>\r\n \t<li>Are OMA accredited advisors<\/li>\r\n \t<li>Have completed a 12 module LIBF accredited training course<\/li>\r\n<\/ul>\r\n<h2 id="bb-mortgage-expert">Speak to a commercial mortgage expert<\/h2>\r\nIf you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-commercial-mortgage-specialist\/">make an online enquiry.<\/a>\r\n\r\nThen sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don\u2019t charge a fee and there\u2019s absolutely no obligation or marks on your credit rating.