Finance for hotels, B&Bs and holiday accommodation

Holiday accommodation runs on a short season and a long off-season. Rooms, restaurants and bars fill from spring to early autumn, then trade drops while the fixed costs carry on. Finance for a hotel, guest house or holiday park should pay for the work that has to be done before the season and be repaid from the season itself.

The cash-flow shape of seasonal accommodation

Picture a coastal hotel's bank balance across a year. It climbs from Easter, peaks at the end of the summer holidays, then falls through the winter as rates, insurance, loan repayments and a skeleton staff are paid out of the summer's takings. The low point often comes in late winter, just as refurbishment needs paying for before the next season.

Three pressure points land on that curve.

Pre-season work. Bedrooms, bathrooms, kitchens, fire safety, and the jobs you can only do while the building is closed. They are paid for when cash is at its lowest.

VAT quarters. Returns and payments are due one calendar month and 7 days after the end of each VAT period. A quarter ending on 30 September means a bill on the summer's takings landing in early November, after the takings have slowed. Your quarter-end months are worth discussing with your accountant.

Seasonal staff. The National Living Wage for workers aged 21 and over has been £12.71 an hour since April 2026, and the rate for 18 to 20 year olds is £10.85. Seasonal hiring pushes the wage bill up early in the year, before the season's money arrives.

Guest deposits complicate the picture. Money taken in winter for summer stays sits in your account, but you still owe the stay. Treat it as owed, not earned.

Which finance fits, and which doesn't

A merchant cash advance collected as a share of card takings flexes with the season. A fixed daily debit does not. If you are offered an advance in autumn, check which you are being offered, and run it against January's takings.

What it costs: a worked example

Say the company takes £60,000 at a factor rate of 1.25 for a pre-season refit, repaid daily over about 9 months.

• You repay £75,000 in total.
• That is roughly 189 daily payments of £396.83.
• The cost is £15,000.
• As an APR, that is about 62%.

Sterling's rule of thumb calls 50–100% APR "expensive short-term money". Nine months from April runs to Christmas, so this one is repaid mostly from the season, which is the right shape. Start the same advance in October and most of it falls on your quietest months. A term loan at 18% APR over 24 months for £100,000 would cost £4,992.41 a month, which you'd also need to clear in February. The calculator on this page converts any factor rate into an APR.

What funders typically ask a hotel or B&B for

• Bank statements covering at least one full season if you have it.
• Card merchant statements for advances.
• Filed accounts, management accounts and VAT returns.
• Occupancy and forward bookings, to show next season's income.
• Property details: freehold or lease, and any existing mortgage or charge.

A personal guarantee from directors may be required, and a funder may run a credit search, which could be a soft search.

Red flags specific to seasonal accommodation

1. Repayments that start as the season ends. Finance taken in September and repaid daily through the winter is the hardest shape there is.
2. Deposits treated as revenue. If an offer is sized on a winter balance swollen by guest deposits, it is sized on money you owe.
3. A charge that blocks a bigger refinance. Some lenders take security over the property. Check any existing mortgage terms before agreeing a second charge.

Limited companies only

Ask Sterling only introduces limited companies, because introducing sole traders and small partnerships is regulated credit broking. Plenty of B&Bs are run by sole traders or couples in partnership, and that's fine; we just can't introduce them. Business finance for limited companies is not regulated by the Financial Conduct Authority.