Hotels find fresh funding for new season expansion

March 22, 2011 - PRLog -- With the holiday season on the horizon, hotels and B&Bs are finding successful new ways to fund vital business expansion as finance from traditional lenders continues to prove elusive.

The leading supplier of advances to small businesses, Business Cash Advance, has reported a 120 per cent increase in advances to small hotels and bed and breakfast businesses in the past year.  

Many hoteliers and publicans who use Business Cash Advance report how pleased they are with the way the company has supported them and recognised that their businesses were viable in these tough financial times.

Sally Tomkins, who runs the King’s Head in Bridgwater, Somerset, used an advance from Business Cash Advance to boost her turnover and improve her profitability.

“Banks and building societies just aren’t interested. You can’t get an overdraft, loans or anything. We couldn’t even borrow on our credit card! So Business Cash Advance has been great. It's brilliant the way you repay the money. They take the repayments straight out from our credit card sales so we don't miss it.

“What I like about Business Cash Advance is that they can see you have a thriving business by what you take in card payments. They trust us to be able to pay it back. Unlike the banks.”

This is echoed by Business Cash Advance’s director Richard Morley who explains why so many independent hotels and B&Bs like using the service. “We agreed with Sally how she could use the advance from us to increase her profitability, turnover and improve services for her customers. What we offer is not a loan but an advance on future credit and debit card receipts. The money is then repaid out of card sales.

“So when a business is doing well, the money is repaid quickly. Likewise, when business is slack, repayments reflect this. There are no penalties for late or early repayment and the advances are unsecured.

“It’s also much quicker and far less onerous to obtain a Business Cash Advance than a bank loan or overdraft. This is also a major reason why so many hoteliers and other retailers like financing their businesses through us this way. It saves time. Bank lending has not only become much more difficult to obtain – it’s also time consuming and many of our clients resent having to jump through countless hoops often only to be told no at the end of it.”

The average size of an advance to the hospitality sector is £17,500 and the number of deals Business Cash Advance is doing for hospitality has more than doubled. The largest single advance was for £70,000 for a hotel in Carmarthen where the funds were used for renovation and the purchase of fittings.

“More independent hotels and B&Bs are finding this the perfect way to finance their business. And we don’t have strings attached to our advances. We’re delighted if the money is used, for example, to buy new stock, develop a website or start a marketing campaign. All areas banks have traditionally been reluctant to lend for,” added Richard Morley.

The money advanced by Business Cash Advance is typically used for:-

•   refurbishment
•   new equipment such as cookers, ‘fridges, washing machines and dryers and also new linen.
•   Marketing and advertising, including website design
•   Decoration
•   Structural improvements.

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• A business cash advance is not a loan nor a form of personal finance for the personal consumer. It is an advance made to independent hoteliers and B&B owners who then repay the money out of their income.

• The advance is not secured. Repayments are made from the business’s credit card receipts on a timescale negotiated between Business Cash Advance and the vendor.

• There are no early or late repayment penalties

• The advances are not for start-ups – the vendor must be already established. However, they need only to have been in business for 12 months before they can apply for a Business Cash Advance.

• To qualify for a Business Cash Advance, a vendor needs 12 months of credit card receipts as the advance is repaid out of future credit card sales.

• Decisions about Business Cash Advances are made much more quickly than by banks.