Hello, I am quite new to all of this. However, my partner and I are seriously looking into opening a hostel in the Highlands of Scotland. There are quite a few things I am unsure of...For a start, we have insignificant savings. Is it realistic to start a business with no personal financial input? Would we even get a business loan that would cover the whole cost of a suitable property (with the property as security)? Or would we require a mortgage? I have been looking into funding/grants for new businesses; there seems to be a few out there. Does anyone have any knowledge/experience of this? Many thanks in advance for any help/suggestions provided! :)
15 years
I'm always interested in hostels in the Highlands of Scotland, and I know a few friendly hostel owners who would be happy to have a chat with you (as long as you weren't going to open up in the same glen!). There's a nice hostel in Newtonmore for sale; it comes with a cottage which can do B&B, but it's not cheap.
15 years
Hi uktrail, thanks for getting back to me. I had a look at the hostel for sale in Newtonmore. It seems quite pricey?
It would be great to have a chat with some friendly hostel owners. What is the best way to get in touch?
Thanks again :)
15 years
These are only my opinions, and have no real financial expertise - before you embark on anything like this you'd want to take professional advice.
I doubt that you'd get a loan without significant capital input from yourselves - otherwise the bank is taking all the risk in the case of a business failure. They wouldn't want to gamble on losing money if the property had to be sold. I've been interested in doing a similar thing too in the past, but there's no way I could see how the figures added up unless you have the majority of the setup money in cash. Remember if you get a business loan, the interest rate will be significantly higher than a residential mortgage. It always seemed to me that even under a best case scenario you'd be working all the time to pay the bank back, and there wouldn't be any left over for your own living expenses.
Regarding grants, the current economic climate means that councils are cutting back on these. Even before though the local Enterprise body wasn't interested in funding businesses that replicate existing services and provide no extra local employment. This meant no funding for tourist accommodation, as there is plenty here already - they have more like a factory or service business employing local people. The only funding that was remotely possible was concerning restoring derelict buildings, but even that was matched - ie you had to provide your own money too.
The former Armadale YH on the Isle of Skye was for sale last year for around £185000. That is relatively cheap, but it would haev required some investment, and is in a bit of an out of the way area. A loan for all the purchase and start-up costs at that low level wouldn't be viable at the previous occupancy of about 3000 bednights a year. Of course if you had a 1 bedroom cupboard in Knghtsbridge you sold and could buy it outright, it would be a great lifestyle opportunity.
Sorry I haven't been that positive - as I say I'm no expert - you'd be wise to seek professional advice before starting anything I think. Good Luck.
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