Bed & Breakfast Finance Going Forward

2020 is definitely going to be a year to remember. Life went from normal to “lockdown” overnight and hospitality businesses were closed down by the government. So does this mean that you won’t be able to buy a bed and breakfast or guest house in the future?

Of course not, what it does mean is that lenders will see the sector as a higher risk post Covid 19 and as a result loan to value ratios may change. Up until now the maximum loan a new to trade operator would have been able to secure on a bed and breakfast or guest house was 65% of the purchase price meaning you needed at least a 35% deposit plus funds to cover fees such as stamp duty, valuation etc. to be able to buy your dream property.

Going forward we are still to see how lending criteria will change but, having said that, Stewart Hindley & Partners have mainstream and specialist lenders who are still willing to lend on hospitality properties. We don’t know what society will look like after the Covid-19 pandemic has gone but one thing we do know is that many people will be looking to take more short breaks and staycations in the UK rather than travelling abroad.

Post Covid-19 could mean a boom period for bed and breakfast owners which would help them to recover from the sudden loss of their incomes and hopefully inject some confidence back into the sector.

If you are thinking about buying a bed and breakfast or guest house and need the best finance deal available to meet your circumstances speak to us here at Stewart Hindley & Partners as we are specialists in the hospitality sector and if we can’t help no one can!

Contact us today and you could have your own bed and breakfast.

Business Support Finance – COVID-19

Launched in response to the coronavirus outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support UK businesses during this period of disruption. CBILS provides the lender with a Government backed guarantee of 80%, against finance offered under CBILS with the balance of risk being held by the lender.

CBILS is designed to assist with cash flow, initially by way of a Capital Repayment Holiday (Interest only period) of 12 months or a commercial loan over 6 years, with no repayments in the first 12 months followed by a 5-year loan facility on a full repayment basis.

CBILS will only be made available to businesses that were deemed “viable pre Covid 19” and as a consequence a “robust” case must be made for your new Capital Repayment Holiday or loan based on your pre Covid trading information.

It is important to note that if your financial and supporting information isn’t presented correctly to meet the lenders requirements, this could lead to a decline for support, which may impact on your existing loan covenants when considered against your lenders’ “prevailing” debt service criteria which may give your lender cause for concern post Covid 19.

During this period of uncertainty, we at Stewart Hindley & Partners are here to help you and have direct access to all the lenders’ that offer CBILS and who are accredited by the British Business Bank. https://www.british-business-bank.co.uk/. If for any reason your business is not eligible for CBILS then we can provide other routes to finance to support your business.

Given the record levels of demand that banks are incurring for general advice and CBILS applications, we at Stewart Hindley & Partners are able to offer, on your behalf, support through our own FCA relationships with all CBILS accredited lenders.

As a result, we are able to deal with the relevant Business Relationship Manager directly, to ensure a prompt application, with the best possible outcome given your circumstances and thereby take away the uncertainty by securing a decision in-principle within 24 hours.

If you’d like to discuss how we can assist you with your CBILS application or any other funding requirement during these challenging times, then please don’t hesitate to get in touch with us either via completing the contact form or by calling us directly on 01488 684834.

Coronavirus – Business Help Available

As the coronavirus (COVID 19) continues to spread across the UK mortgage lenders have been taking special measures to ensure that borrowers are protected from financial shocks.

Most, if not all, lenders have put in place emergency funding to help existing SME businesses get through this period of uncertainty.

If you feel that your business may come under duress over the coming months, please speak to us now so we can assist you to put in place interest only periods or repayment holidays.

How Much Deposit Do I Need to Buy a Bed and Breakfast?

Opening a bed and breakfast (B&B) can be a great way to generate income while stepping back from the typical 9 to 5. It’s hard but rewarding work, and enables you to create a business that reflects your personality and passion as a hospitality business operator.

However, unless you live in a large property with a significant number of spare rooms, you will need to invest in a new property in order to set up a B&B business.

In most cases, that will mean taking out a mortgage. But what sort of mortgage will you need? And how much deposit will you be expected to pay when you buy your bed and breakfast?

As with any mortgage, different lenders will have different requirements when it comes to deposits for a B&B. The type of mortgage you will need will depend on a number of factors, including how much of the total space in the property will be used for commercial purposes.

Deposit for a commercial mortgage

In most cases, if you are using less than 40% of the property for personal use, you will require a commercial mortgage, or a semi-commercial mortgage.

Most commercial mortgages require a deposit of between 30% and 40%, depending on the level of risk they deem your business to come with and the type of commercial mortgage you have applied for.

Buying a B&B without a deposit

Whichever way you buy your B&B you will need a deposit.

If you don’t have a cash deposit for your bed and breakfast, you may be able to release equity from your existing property or another property to release the necessary funds for the purchase of the new B&B and Stewart Hindley can help with this.

If you’re considering buying a bed and breakfast, it’s important to speak to someone experienced in the hospitality finance sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team.

4 Tips for Appliance Safety in Your B&B

Beckie Hatton is a Product Manager at Home Appliance Care, so she understands exactly how important it is to have safe and efficient electrical appliances. Here, she offers her advice to B&B owners who want to follow the rules and keep guests safe.

All B&B owners have a legal responsibility to safeguard the public and their employees from harm (legislation.gov.uk). More specifically, you must make sure your electrical appliances are well-maintained and fit for purpose to prevent fires, gas leaks, electric shocks, and other disasters.

Small hospitality businesses that fail in their legal obligations can face serious consequences, from penalties and lawsuits to property damage and fatalities. So, it’s important to stay on top of maintaining the electrical appliances in your kitchen, guest rooms, and communal areas to keep your guests safe.

Below, I’ll be sharing some of my tips for making sure the appliances in your B&B are safe to use.

Which appliances to check

Any utensils and appliances that are battery operated or can be plugged into the mains must be well maintained and regularly reviewed. You should check them for signs or wear or damage at least once every month as part of your fire risk assessment (gov.uk), and they will have to be serviced or PAT tested every 6-12 months to be declared fit for use (pat.org.uk).

When you first think about which appliances in your B&B could be considered high-risk, most people rightly think of ovens, toasters and straighteners that are designed to heat up. But washing machines and tumble dryers account for more than a third of domestic fires, significantly more than cookers (11%), so it’s crucial that you keep on top of the maintenance of these appliances in particular (Which?).

Should I call an engineer?

You should contact an electrical engineer if you have any concerns about the internal wiring of your appliances rather than attempt to fix them yourself. Tampering with electrical systems can cause injuries or fatalities, and if you don’t have the right tools or knowledge you could put yourself and everyone else on the premises at risk.

Plus, tampering with your appliances usually voids their warranty and your insurance policy, so you’ll have to cover the cost of repairing and replacing any damaged machines. It’s safer and cheaper overall to let the professionals deal with it instead.

Common faults to watch out for

External issues like loose plugs, switches and outlets can often be amended by a quick screw retightening, and you can also replace any broken casings yourself using just basic tools and knowledge — but you must switch off and unplug everything first so there’s no electrical current.

If you notice your plugs, outlets and switches are getting warm, it could be a wiring issue that can cause a fire if not immediately fixed. In this case, these will need to be repaired or replaced as soon as possible and you should not attempt to use the appliance while you wait for the electrician.

Flickering lights or displays on your appliances, as well as your bulbs burning out too quickly, can be indicators that there is a loose connection somewhere inside the machine. If you notice any of these problems, you should stop using the appliance and call a professional immediately.

How to look after your appliances

Never skip your monthly fire risk assessments, annual services, or scheduled PAT tests. Fires and other electrical dangers don’t just happen as the result of faulty products — appliances that aren’t properly maintained pose a risk too. Failing to clean them properly, check them over regularly, and take care of small problems can lead to huge disasters, so you must have adequate maintenance strategies in place to tackle all these issues.

Encourage your kitchen staff to clean appliances at the beginning and end of each day to prevent build ups of food crumbs, grease and other debris — just be sure that they follow the manufacturer’s instructions for doing this safely. Cleaning in a way the manual suggests will also protect your appliances from corrosive damage which can lead to electrical issues, such as loose wiring. So, hang onto your user manuals and double check all their cleaning practices are compliant with the manufacturer’s suggestions.

These are just some of the ways you can make sure the appliances in your B&B are as safe as possible. By giving them a quick look over as often as you can and promptly reporting any issues to an electrician, your appliances can be safe for use and you can get on with managing your guesthouse.