Yes. If you want a loan to refurbish the property and get started up you obviously have to write a business plan.
Before writing your business plan though, make a spread sheet that includes ALL the expenses for the first 6 months of your hostel. Then, calculate the profit margin in the 1st year and first 3 years at 50 or 60% occupancy depending on how safe you wanna play it. Remember to think of ALL the expenses (renovations, VAT, utilities...) and remember there will be expenses you won't be expected (there ALWAYS are). Be it agent fees for the property, hardcore maintenance, etc.
Secondly, find out ALL you can about your local municipality. What is the VAT rate, taxes etc, employment laws, etc.
If you are in a bigger city the municipality might offer benifits.
For example, when I start up MY hostel, I read up that the city pays for over 50% of supplies for starting businesses (desks, computers... and I don't what else.)
I am a foreigner here, and I also read up that there are certain benefits for foreigners.
When you have done those 2 things you can start writing a business plan.
I'm really busy right now and can't bother to look for the links but I have a few good outlines for hostel business plans. If you want I can find and send you those links. I don't know how far you are into writing it.
Anyway, good luck!