Bed and breakfast non-repayable loans: is it possible?

Bed and breakfast loans also non-repayable?

Bed and breakfast loans also non-repayable?

If you have a property that is not used or has not been rented, you can consider opening a guest house or a bed & breakfast. But are there non-repayable loans to draw on?

The answer is at least ‘partially’ positive, but whether you opt for a landlord (thus granting the room for rent for short periods) or if you want to set up the activity of a bed & breakfast, there are conditions and specific characteristics to be respected, which often require work to adapt and renovate your property (details: home renovation loans).

In this regard, according to the data developed by Bankate in 2017, the restructuring of even just 70 square meters costs more than 34 thousand USD to reach over 50 thousand USD for dimensions of 120 square meters, considered by experts as the minimum width of the building to start an activity of this type.

What kind of financing can be accessible?

What kind of financing can be accessible?

First of all, if you want to open a very special activity, like a bed & breakfast, you should do it only if you have a property owned by you (your own or someone’s family). Starting this type of exercise by borrowing is in fact risky and in most cases not very profitable.

Among other things, there are no funds (neither with a grant nor with another type) that regional or state institutions are willing to provide to allow the purchase of a property, even if the project to open an activity with it is presented.. So it is absolutely essential that you already have a property.

So the financings that can be obtained can be only those suitable to make a structure suitable to carry out the activity of landlords (without there being the service “breakfast”) or bed & breakfast. In this sense, it is possible to request loans from banks, for example by looking at the section of services offered to the activities, or to see if one’s own region has an active call for proposals involving this type of activity among those that can be “financed”. In this regard there is no single regulation and each region has the possibility to decide:

  • what kind of appropriation to allocate to specific activities;
  • what amount to allocate to each call;
  • the minimum necessary requirements both objective and subjective;
  • the times within which to present the allocation requests;
  • the type of expenses and interventions allowed;
  • whether it is a pure non-repayable loan (therefore what percentage loans should not be repaid) or mixed (with subsidized loan rates and more favorable installments with long repayment periods, etc.).

If you are looking for solutions that are exclusively non-refundable, the first thing to do is instead to look in the “active calls” section of your region. If you then reside in one of the regions that have been included in the type of financing called ‘ Rest to the South ‘, then you have the possibility of being able to access this other form of subsidized loan, paying attention to the fact that normally there is no it is a combination of the various types of financing.

How it works rest in the South

How it works rest in the South

Invitalia, through Resto al Sud, until the end of the allocated fund (set at 1,250 million USD) offers help to those who want to start up a business (provided it has all the necessary objective and subjective requisites) in the form of:

  • a non-repayable loan for 35% of total expenditure;
  • 65% as subsidized bank loan, by virtue of specific agreements with the main credit institutions.

In the case of bed & breakfasts and landlords the activities that can be financed are: equipment purchase costs (including the software necessary for the management of reservations, for the preparation of a website, etc.) and extraordinary renovation works. To these we can add those relating to the lease fees of the building, a hypothesis, however, to be carefully evaluated considering that the start would take place with certain expenses, even quite high.

Minimum requirements necessary

Minimum requirements necessary

As can be understood from the name Resto al Sud it is aimed at those who want to start a business in the South, so the main requirement is that of the location of the properties to be used for starting the business, which must be compulsorily in one of the following Regions:

  • Abruzzo,
  • Basilicata,
  • Calabria,
  • Campania,
  • Molise,
  • Puglia,
  • Sardinia,
  • Sicilia.

It is also necessary that the applicant’s residence is in the same regions listed or that it is transferred there after the communication of the approval of the financing request.

To this requirement is also added the personal data, considering that the demand is up only to young people between the ages of 18 and 35, with the addition of the job position: you do not have to have a permanent employee contract at the moment of the request and not even having a business activity (of any kind).

The request can also be made not by individuals, but by companies or cooperatives that have not yet been established before 21 June 2017. The possibility of creating a team of people within 60 days of the positive response to the funding request is permitted. The 60-day time doubles if the applicants are abroad.

As with the evaluation

With this type of financing, the creation of a ranking is not envisaged, and the presentation takes place at the counter. The documentation to check the possession of objective and subjective requirements is evaluated and the evaluation is carried out following the chronological order in which the applications are presented. The process, as mentioned before, will continue until the $ 1,250 million allocation is exhausted.

Conclusions

Before seeing if there are opportunities to obtain non-repayable loans for a bed & breakfast, we must concentrate on the type of property that can and will be used to start the business. To be evaluated also if the area where the structure is located guarantees a good flow of tourists or it is an area that would require a great deal of marketing and advertising to make its service known, with an increase in costs and an increase in the unknowns about the possibilities successfull. In this sense, possible studies on the commercial prospects offered by specialized companies can be helpful.