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B&B Loans: Best Business Loans for Bed and Breakfasts

Operating a bed and breakfast can be challenging, especially when you consider unpredictable occupancy rates and reduced revenue during the off-season. Thankfully, there are many loan options available to help B&B owners cover costs and keep their businesses running year-round.

Bed and Breakfast Loan
Christi Gorbett
Freelance Content Marketing Writer

Reviewed by: Jen Hubley Luckwaldt, Content Writer and Editor

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Bed and breakfasts tend to be seasonal businesses with occupancy fluctuating from month to month. With such unpredictability, it can be difficult to ensure expenses are covered throughout the year. The good news is there are many lenders offering small business loans to help B&Bs stay in operation despite their reduced cash flow.

This article will teach you everything you need to know about how to finance your bed and breakfast, you’ll learn about how to use B&B loans, available loan types, and what criteria to use to select the best loan for your B&B. 

B&B Loans: Best Business Loans for Bed and Breakfasts

Finding the best bed and breakfast financing takes a bit of research. You must spend time evaluating the various options to find one that best matches your needs

In this review we highlight the rates, fees and terms of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a methodology you can use to select the best option for your needs.

 

Best B&B Businesses Loans for 2022 - Full Overview 

Here’s an in-depth look at some of the best lenders for B&B loans. 

Kabbage - Best for Fair Monthly Revenue

Kabbage offers only one type of small business loan: a business line of credit between $2,000 to $250,000. Some borrowers may be eligible for larger lines of credit, depending on the specifics of their business. Business lines of credit are useful for short-term financing needs. If your bed and breakfast business needs help covering a temporary cash-flow shortage, Kabbage’s line of credit can help

Pros
Straightforward application process
Decent monthly revenue requirement
Excellent customer support
Cons
Only offers one small business loan product
Potentially high fees
Complicated fee structure

Each draw on the credit line is a separate 6-,12-, or 18- month installment loan. Kabbage’s fee structure is different from many of its competitors. Borrowers pay a fee each month t
hey have a balance on their credit line. The total monthly fee range is as follows:

  • 2-9% for 6-month loans 
  • 7.5-18% for 12-month loans 
  • 15.75-27% for 18-month loans

The Bottom Line

Kabbage’s straightforward application process and decent monthly revenue requirement make their commercial line of credit product an excellent choice for bed and breakfast businesses. 

Biz2Credit - Best for Working Capital Loans

banner Biz2Credit

Biz2Credit’s working capital loans are an excellent option if you need to receive funds fast to cover short-term expenses. Disbursements can be completed within 24 hours after the application is received for amounts between $25,000 to $2 million. These are especially helpful for bed and breakfast owners who need cash quickly to cover shortfalls caused by unexpected vacancies or low off-season demand. 

Pros
Multiple loan types available
Straightforward application process
High borrowing limits
Low minimum credit score
Fast disbursement of funds
Cons
Interest rate not disclosed up front
High annual revenue requirement
Origination fees between 1% to 6% assessed

Biz2Credit offers bed and breakfast working capital loans with variable term lengths in amounts between $25,000 and $2 million. Repayment schedules for these loans are flexible; borrowers can make payments daily, weekly, or bi-monthly. Interest rates for working capital loans are not publicly disclosed by the lender but are addressed during the application process.

Biz2Credit allows you to apply for a business loan for your bed and breakfast even if you have subpar credit; the minimum credit score required for a working capital loan is 575, which is in the “poor” range. Other qualifications aren’t as lax; your bed and breakfast needs to be open 6 months before applying with Biz2Credit and have an annual revenue of at least $250,000 per year.

The Bottom Line

Biz2Credit’s working capital loans are a good choice for bed and breakfast owners who need financing quickly. If you’re looking to make renovations, choose Biz2Credit’s commercial real estate loans, but keep in mind they’ll need to be repaid within three years. The credit score requirement is low but your bed and breakfast must earn $250,000 annually to qualify, so check to make sure you meet the requirements before applying.

National Funding - Best for B&B Equipment Financing

Banner national funding

National Funding is the best loan option for bed and breakfast owners with fair credit.. Repayment is required within 6 to 15 months, which makes this a good choice if you’re struggling with cash flow issues in the off-peak season or need to pay for unexpected expenses.

Pros
Easy application process with minimal paperwork
Quick disbursement, as fast as one business day
Loans available to borrowers with less than excellent credit
Discounts for early repayment
Cons
Limited repayment terms
Factor rates can be high
Additional origination fees charged

National Funding offers bed and breakfast financing of $5,000 to $500,000. These loans come with payment terms between 6 to 15 months. If more funding is needed, you’re eligible to apply for additional loans 60 days after your original disbursement.

Though the acceptance rate is high for these loans, your B&B will need to be on solid financial ground—your business must earn $250,000 annually and be active for at least 6 months to qualify for a loan. National Funding also charges loan origination fees, which could equal up to 36% of the loan total.

In addition to bed and breakfast term loans, National Funding also offers equipment financing and standard term loans

The Bottom Line

National Funding is a great choice for owners of an established B&B. The payment terms are relatively short - between 6 to 15 months - which makes them excellent bed and breakfast business loans for owners who are temporarily struggling with cash flow problems.

Fora Financial – Best for Short-Term Loans

banner_Fora Financial

Bed and breakfast owners looking for short-term loans should consider borrowing from Fora Financial. They offer loans ranging from $5,000 to $750,000to be paid off within 4 to 15 months. There are no usage limitations on these short-term loans; you can use them to upgrade  the restaurant  equipment for your B&B, cover wages during slow seasons, or purchase new mattresses. 

Pros
Fast funding in as little as 24 hours
Wide range of uses for loans
Can qualify with poor credit
Low annual revenue requirements
Cons
Interest rate may be higher than average
Borrowing, origination, and late payment fees

Fora Financial offers short-term loans between $5,000 and $750,000 that must be repaid within 4 to 15 months. Interest rates for these loans vary, but they typically fall within a 1.1 to 1.9 factor rate. If you borrow $10,000 at a 1.2 factor rate, that means you’ll need to repay $12,000 ($10,000 x 1.2). They may also assess a loan origination fee and borrowing fee.

Fora Financial’s short-term loans are available to bed and breakfast owners with poor credit and limited annual revenue. You only need $12,0000 minimum in gross salesto qualify. The required time in business is also low—just 6 months—making these an excellent option for new B&B owners.

The Bottom Line

Fora Financial’s short-term loans are a good choice for new B&B owners with limited revenue and poor credit. Disbursement is fast and there are no limitations on fund usage, so you can apply your loan to any of your bed and breakfast’s needs.

Fundbox - Best for Start-up Costs

Banner funbox

Fundbox’s business line of credit is ideal for bed and breakfast owners who need a quick infusion of cash but want to pay it back quickly. With a line of credit through Fundbox, you can be approved for any amount between $1,000 to $150,000 to be paid back in 12 to 24 weeks. This allows you to withdraw funds whenever you need them, instead of having to take out another loan every time room occupancy doesn’t match your business forecast. 

Pros
Easy application process
Funds typically disbursed in one business day
Borrowers with “fair” credit can apply
No origination, prepayment, or registration fees
No monthly minimum withdrawal
Payment is made automatically
Cons
Interest rates are high
Low maximum loan amount
Limited repayment terms

Bed and breakfasts can take out a business line of credit through FundBox in any amount between $1,000 and $150,000. Unfortunately, interest rates are high for Fundbox’s lines of credit. Of course, you won’t be paying the full amount since this is an annual rate and repayment must be completed in less than a year (12 to 24 weeks, to be exact).

Fundbox’s requirements for time in business, minimum credit score, and annual revenue requirements are fairly easy to meet. To qualify, your bed and breakfast must be operational for 6 months and earn at least $100,000 annually. You must also have a credit score of 600 or higher for approval. 

The Bottom Line

Fundbox’s line of credit is a great choice for bed and breakfast owners who need short-term funding that offers flexibility. You can borrow as little or as much as you’d like and only pay interest on what you’ve taken out. Payments are automatically deducted every week and the interest rates are high, but you don’t pay the full annual interest rate since loans are paid back quickly.

Try Fundbox

Fundera - Best for Multiple Options

banner_ Fundera

Fundera is a direct lender and loan marketplace that connects businesses with a wide variety of small business loans. Loan types offered include SBA loans, term loans, lines of credit, invoice financing, and merchant cash advances.

Pros
Various loan types offered
Prequalify with a soft credit check
Partnerships with multiple lenders
Competitive interest rates
No minimum annual revenue or business history
Extended repayment terms
Cons
May take a while to receive funds
Not all qualifications are divulged publicly

Fundera offers multiple loan types with varying value ranges, terms, and payback periods. For example, their business term loan offers a maximum loan amount of $600,000. Borrowers pay back their loan over terms of 1 to 5 years. The interest rate range is 7% - 30%. Fundera’s business line of credit options typically have maximum loan amounts of $10,000 to $1 million, terms of 3 months to 18 months, and interest rates ranging between 7% - 25%.

Because Fundera is a marketplace as well as a lender, terms will vary. If you choose to find your loan through Fundera, you’ll be assigned a funding advisor who will help guide you through the process.

The Bottom Line

Fundera offers a broad range of financial products, and terms vary according to the lender and loan. The company’s strengths are its connections to lenders and top-rated customer service. National Funding - Best for Fair Credit Business Loans

Try Fundera

OnDeck - Best for Fast Funding

Banner Ondeck

OnDeck terms loans are great for B&B owners who need money fast. You can apply, get approved, and receive funding in as little as one business day. Repayment can take up to 24 months with payments automatically deducted every day or week. This speed and flexibility make OnDeck term loans an excellent option if your bed breakfast requires unexpected repairs or you need financing to cover operational costs in the off-season.

Pros
Simple application process
Fast approval decisions
Funding in as little as 24 hours
Relatively low credit score requirement
Discounts for repeat borrowers
Cons
Only two borrowing options available
Widely ranging interest rates
Limited term length
May charge origination and maintenance fees

OnDeck offers bed and breakfast business loans in amounts ranging from $5,000 - $250,000. The average APR for these loans is 49.06%.. Repayment can be spread out over 24 months with discounts for early payoff. Be forewarned that OnDeck does charge loan origination and maintenance fees.

OnDeck also offers a business line of credit of $6,000 to $100,000 with an average APR of 35.2%. Both term loans and lines of credit require that you have a credit score of 600, be in business for at least one year, and earn $100,000 in revenue each year. The application and approval process for both types are quick and easy; you may be able to receive funding within 24 hours of completing your application.

The Bottom Line

OnDeck term loans are an excellent choice when you need money fast to cover unexpected expenses at your bed and breakfast, like replacing a broken air conditioning unit or refrigerator. The application process is simple, and you can expect to receive your funds in as little as one business day.

Try OnDeck

How to Choose the Best Bed and Breakfast Businesses Loan

  • Loan features: It’s important to evaluate your B&B loan options by comparing the features of each loan—including loan terms, repayment options, and loan amounts—to your needs.
  • Application process: Take note of how difficult, invasive, and fast the loan application process is. Will you be able to prequalify with a soft credit pull that won’t harm your credit score? How long will it take for approval?
  • Interest rates and fees: Some of the loan fees you might incur include application fees, loan origination fees, monthly service fees, prepayment penalties, late payment fees, payment protection insurance, and charges for non-sufficient funds.
  • Qualification process: Make note of the qualification process, including the minimum credit score, annual revenue needed, and business history requirements
  • Customer support: The best lenders offer live customer service reps who can be reached through multiple communication channels, including online chat, phone, and email.
  • Online user reviews: Take time to look through reviewson independent sites like Trustpilot.
  • Perks and bonuses: Also look for additional perks and bonuses such as payment flexibility, advanced technology, small business education opportunities, and advertising transparency. 

 

Main Features of the Best B&B Business Loans

CompanyMin. Credit ScoreMin. Time in BusinessMin. RevenueLoan AmountInterest Rate
Kabbage64012 months$3,000 monthly revenue$2,000 to $250,0006-month loans: 2-9%,  
12-month loans: 7.5-18%  
18-month loans: 15.75-27%  
 
Biz2Credit5756 months$250,000$25,000 to $2 millionDisclosed on application
Fundbox6006 months$100,000$1,000 to $150,000Not disclosed
Fora FinancialNot disclosed6 months$12,0000 minimum in gross sales$5,000 to $750,000Factor rates between 1.1 and 1.9
Fundera550No minimum requirementNo minimum requirementUp to $50,0008% to 13%
National FundingUndisclosed6 months$250,000$5,000 to $500,000Undisclosed
OnDeck60012 months$100,000$5,000 - $250,000Varies.

 

What Are the Costs of Running a B&B Business?

Running a B&B business can be an incredibly rewarding experience, but it’s not without its costs. Here’s a rundown of what you should expect to spend while operating your bed and breakfast. 

  • Initial costs: If you don’t already own the home you want to convert into a bed and breakfast, you’ll need to invest in one. The cost of the property will vary depending on its size, location, and condition but you can expect to spend anywhere from $200,000 to $1 million or more. 
  • Renovations: Once you’ve acquired your property, you’ll need to invest in renovations to get it ready for guests. Common renovations include bringing the plumbing and electricity up to code, expanding the dining area, building a commercial-grade kitchen, installing a security system, and updating bathrooms. These renovations can range anywhere from $5,000 to $50,000 and up.
  • Licenses and insurance: You’ll need to register as a legal business then obtain the proper licenses, permits, and insurance before you open up for guests. The exact requirements and costs will vary by location, but these expenses could add up to several thousand dollars. 
  • Bedding: Each guest room will need new mattresses, bedding, pillows, and towels which can run you up to $1,000 per room.
  • Food: Your food costs will depend on what type of meals you serve and how many you offer per day, but you can typically expect to spend at least $7 per guest for each meal. 
  • Marketing: If you want to attract guests, you’ll need to set up a website and actively market your bed and breakfast. Initial web site setup could cost a couple thousand dollars with monthly marketing costs reaching approximately $500 per month.

 

How Can You Use Bed and Breakfast Business Loans?

While some lenders may have strict rules about loan usage, most allow bed and breakfast owners to use loans in whatever way they wish. Here are a few examples of how bed and breakfast financing can be used.

  • Additional space: You can use bed and breakfast business loans to add rooms to your home, expand outdoor seating, or enlarge dining and lounge areas.
  • Interior upgrades: Loans for a bed and breakfast can also be used to paint the interior, add wallpaper, install new flooring, or purchase new furniture.
  • Kitchen remodel: Another popular option is to use bed and breakfast financing to remodel the home’s kitchen and bring it up to code. 
  • Security improvements: Loans can also be used for security improvements like a key card entry system, smoke alarms, and fire alarms. 
  • Day-to-day operations: Loans don’t have to have to be applied toward special investments—you can use them to cover the cost of day-to-day operations, especially during the off-season.

 

How to Qualify for a B&B Business Loan?

Learn About Various Loan Options

Take some time to educate yourself on the different kinds of loans that are available to bed and breakfast owners, including working capital loans, microloans, lines of credit, etc.

Build And Maintain Your Credit

To qualify for a wider range of loans and get the best loan terms possible, do all you can to raise your credit score and keep it in the “fair” range or above (580+).

Prepare Your Documents in Advance

Make sure you have all the necessary documentation available, including your business plan, bank statements, business license, income statements, balance sheets, cash flow statements, and statements of capital.

Know How Much You Need to Borrow

Determine how much you need to borrow before applying for bed and breakfast business loans. If you’re using the money to purchase equipment, such as baking equipment, or make renovations, be sure to get estimates in advance.

Decide What Type of Loan You Need

Spend some time evaluating your options before choosing bed and breakfast financing. For example, if you only need to borrow a small amount, focus on lenders offering microloans. If you need a quick infusion of cash to cover unexpected repairs, look into short-term loans.

Apply Only for Loans That Match Your Qualifications

Don’t waste your time applying to lenders if you don’t meet their qualifications. Check the requirements in advance to improve your odds of getting approved for a B&B loan.

 

Conclusion

Running a bed and breakfast comes with a unique set of challenges. Because occupancy rates fluctuate throughout the year, it can be hard to predict your cash flow and pay for unexpected expenses, especially during the off-season. The good news is you don’t have to worry about how to finance your bed and breakfast and keep it operational—there are many lenders willing to offer help when you need it.

Christi Gorbett

Written by: Christi Gorbett

Freelance Content Marketing Writer

Freelance Content Marketing Writer specializing in finance, personal development, education, marketing, web development, food & beverage manufacturing, pet, and contracting/home improvement niches.

More about me
Jen Hubley Luckwaldt

Reviewed by: Jen Hubley Luckwaldt

Content Writer and Editor

Jen Hubley Luckwaldt is an editor, writer, and content strategist with a focus on personal finance, careers, and DEI. A small business owner for over a decade, Jen helps publications and brands create and optimize B2B and B2C content.

More about me

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