B&B start up but no money... - possible?

[skyedreamer]

My partner and myself are looking at starting our own B&B in one or two years time, but we don't really have money from ourselves to invest. We don't have any debts either though apart from the mortgage on the house we bought a year ago and a minor loan which will be paid off soon. Credit card is paid off and bank accounts look good, but no major savings at the moment.
Is our idea viable? Will a bank give us the money to buy a B&B to live in and run? Sort of as a combination of a new mortgage and a loan?
Will we be able to keep our current house and mortage and let the house for some extra income? It should not prove a major problem to find tenants as the house is in an area with a few new multilingual callcenters that will have to bring in people from overseas.
If it makes a difference, I have worked in hotels for over 10 years of my life and we have both been working in customer service / customer care environments (although in the form of callcenters) for the past few years, I have got a certificate to have passed a "Scotland's Best" seminar, and we are looking at having two "side businesses" if you want, my fiancee in web design and PC servicing, myself in the more crafty area of calligraphy.

Out of your experience, do we stand a chance to get financed?

[peterjhale]

Hi Skyedreamer and welcome to the forums

Everyone always has a chance - but you will need some money of your own.

Best bet is to discuss this face to face with your bank (hopefully you have a long standing arrangement) and see what they say. They will be able to let you know one way or the other straight away.

But do not give up - if they say no, ask why and what you need to do to progress

[inbakumar]

Hi Skyedreamer,

You have an interesting plan and it looks like your heart is fully set on it .

As for finance, why do you want to keep your existing house? Since you have bought it an year ago, it would have gone-up in value hopefully by about 15-25%. Selling it will enable you to realise the equity that is locked in your house, which could be used as part of the deposit for the B&B. The other option you have is to release the equity locked-up in your home by way of getting a second charge loan. If you need any further info on this please let me know.

As for finance, a bank will lend around 70-85% of the value of the B&B, which means you need to find 15-30% of the purchase price. For more details you can visit our website at www.babylonbusinessfinance.com/page.asp?p=45

Moreover, you may be able to run a B&B as a leasehold, which means no or small upfront costs. Instead of paying a mortgage you will be paying a rent.
I have had a quick search and the following came-up which should give you an idea of this route:

GREAT EASTERN HOTEL
Excellent location close to train station
15 letting rooms
Bar/restaurant circa 70 covers
Lounge bar
T/O to year ended 30.09.03 £263,551 ex VAT
Adjusted net profit approx £24,000

Leasehold - Offers invited £75,000

For the above business, they are asking for a premium of £75k but you may be able to get one with very little or no premium.

Needless to say, you will require a solid business plan for which you can enlist the help of Peter.

Good luck and best wishes,

Regards

[peterjhale]

Hey, Joel

Do you run an affiliate scheme or anything like that so I can add you to my small business loan page at http://www.teneric.co.uk/small-business-loan.html

?

[inbakumar]

Hi Peter,

We do not have a web based affiliate system like you have. However, we do have an off-line scheme which we operate for people who introduce business to us. I will send you details of it by email. BTW, we have signed-up for your affiliate scheme . Hope it generates some business for you.

Regards,

[peterjhale]

Yes - I saw you signed up thanks -let me know where you add the link