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.
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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.
Finding the best bed and breakfast financing takes a bit of research. You mustspend time evaluating the various options to find one that best matches your needs.
In this review our experts 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 rating methodology you can use to select the best option for your needs.
Best B&B Businesses Loans for 2023 - Full Overview
Here’s an in-depth look at some of the best lenders for B&B loans.
American Express Business Blueprint™ - Best for Fair Monthly Revenue
Monthly fee: 3-9% for 6 month loans, 6-18% for 12-month loans, 9-27% for 18-month loans
Loan amounts ranging from $2,000 to $250,000
No prepayment penalties and no origination fees
Convenient application process
Pros & Cons
Straightforward application process
Decent monthly revenue requirement
Excellent customer support
Only offers one small business loan product
Potentially high fees
Complicated fee structure
American Express Business BlueprintTM offers only one type of small business loan: a commercial line of credit from $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, American Express® Business Line of Credit can help.
Each draw on the credit line is a separate 6-,12-, or 18- month installment loan. American Express Business Line of Credit’s fee structure is different from many of its competitors. Borrowers pay a fee each month they have a balance on their credit line. The total monthly fee range is as follows: 3-9% for 6-month loans; 6-18% for 12-month loans; 9-27% for 18-month loans.
To qualify, you'll need a minimum credit score of 640, however, all businesses are unique and are subject to approval and review.
American Express Business Line of Credit’s straightforward application process and decent monthly revenue requirement make their commercial line of credit product an excellent choice for bed and breakfast businesses.
Industry best factor rate for MCA - as low as 1.10
APR for the Line of credit product starts at 35%
Flexible repayment terms up to 16 months
Get funding in as little as 24 hours
Check your rate with a soft credit pull
Pros & Cons
Easy online application
Instant lending decision
Fast funding times
No collateral required
Tailored business loans
Flexible payment options
Startups will not qualify
Certain industries will not qualify
Rates and fees not disclosed on the website
Backd offers bed and breakfast business loans up to $2 million, making them ideal for those that want to update their space or perhaps purchase a new one altogether. Backd has a unique business model in that they tailor their loans specifically to each business. Founded in 2018, they’ve funded more than $1 billion to more than 10,000 small businesses across the U.S.
Backd offers two types of loans to bed and breakfast businesses - working capital loans and business lines of credit. Working capital loans range from $10,000 to $2 million with terms up to 16 months. Payments are made daily, weekly, or semi-monthly depending on what works best for you. Business lines of credit range from $10,000 to $750,000 with unlimited terms. No collateral is required for either type of loan.
To qualify, you must be based in the U.S., have a business bank account, be in business for one year or more, and have at least $100,000 in annual revenue.
Backd was created to get more businesses the funding they need; you could easily be one of them. It takes just a few minutes to fill out the application and you should receive a lending decision instantly. Review the rates and fees, and then decide whether or not you’d like to accept the loan. If you do accept, funds should be in your account within 24-48 hours.
Excellent customer reviews on independent review sites
Pros & Cons
Easy online application
Applying does not affect credit score
Bad credit accepted
Excellent customer reviews
Fast funding times
Representative guides you through the process
Startups may not qualify
Must have high annual income
Lendzi offers loans to small businesses with high revenue or who have been denied funding elsewhere. They are a direct lender and partnered with more than 75 other lenders, increasing the odds of getting you the bed and breakfast loan you need, even if your credit isn’t ideal.
Lendzi offers three products for your bed and breakfast business. The first is a working capital loan up to $400,000. Terms are between three and 15 months, and factor rates start at 1.15. The minimum credit score required is just 500. Second, Lendzi offers equipment financing loans. These can be used to purchase inventory or equipment for your business. You can borrow up to $2 million, terms vary between 12 and 84 months, and the minimum credit score requirement is 550. Because the equipment acts as collateral, these loans come with low rates starting at 3.49%. And finally, Lendzi offers merchant cash advances which allow you to borrow up to $400,000 as an advance on future sales. Factor rates start at 1.10 and terms vary between three and 15 months. To qualify, you need a credit score of 525 or higher. Other requirements of qualifying for a loan from Lendzi include six months of business history and $180,000 or more in annual revenue.
Lendzi works with dozens of lenders to get you funding for your bed and breakfast, regardless of credit score. They offer seven different types of small business loans, three of which cater to poor credit. Once you apply, a Lendzi representative will reach out to discuss your business and review your loan options. Currently, Lendzi has more than 2,000 5-star reviews on Google, TrustPilot, and Better Business Bureau. We highly recommend giving them a chance if you have been struggling with your credit.
National Funding - Best for B&B Equipment Financing
Loans available to borrowers with less than excellent credit
Discounts for early repayment
Limited repayment terms
Factor rates can be high
Additional origination fees charged
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.