Bed and Breakfast Loans - Whats Still Available

Bed & breakfast loans?can be difficult to fund.? Lenders tend to shy away from this property category for a couple of reasons.? For example, bed and breakfasts are often located in small rural location which adds additional risk.? Lack of lodging experience on the borrowers part often further complicate the matter as many people have the dream of retiring into the B & B business after a long career of doing something else.? ????

As far as loan options that are available, the borrower can expect to see conventional, SBA loans and a few CMBS options.? Conventional programs, meaning loans offered by traditional banks, for B & B's normally will not exceed 65% on purchases and rarely exceed 55% on either a rate and term refinance or cash out.?

Conventional banks want to see that you have some "skin" into the deal.? Keep in mind however, that conventional?programs vary widely from one lender to the next and it is not uncommon for a lender to have a decent program.? Perhaps they like the town or they will ask with your deposits or to cross collateralize with other property you own, etc.?

Loan programs will normally be fixed for 5 year with a 20 year amortization schedule.?

The SBA 504 and SBA 7A loan programs, offer some of the best finance options for borrowers seeking acquisition?and refinancing capital?for B & B's (Note that YES it is possible to refinance a B & B via the 7a program). The primary benefit of the 504 program is twofold, high leverage (85% LTV), long term, fixed rate financing.? The 7a program is geared towards?loans under $2,000,000 and is an ideal program for B & B loans.

Note, that some banks offer the SBA 7a as a 5 year fixed, 25 year amortization loan and that 85% financing is common as well with this program.?

CMBS lenders, which are currently taking a beating right now due to the subprime mess, have offered some creative options.? Like 85% financing, 30 year fixed rates and stated income programs. Much is changing however in this section of the industry and we are all waiting to see how it shakes out.??