Many people dream of running their own bed and breakfast, a small inn usually based on a theme or located in a historic home or district. Most bed and breakfasts offer what the name implies – a place to sleep and breakfast in the morning. Starting a bed and breakfast can be costly, but there are resources you can tap to make your dream of owning a bed and breakfast come true.

How to Find Funding for a Bed and Breakfast

Take an inventory of your needs. Decide whether your bed and breakfast will be in an old home you own or one you'll buy. Ask yourself if you can do work on the house or if you'll have to hire someone else to do it. Can you afford furnishings, appliances and the like?

Come up with a budget. Ask another bed and breakfast owner to help you determine how much you need to budget for restoring your building, furnishing common areas and bedrooms and other expenses. According to Entrepreneur magazine, you should be prepared to spend anywhere from $20,000 to $40,000 on each room. Guests expect private baths and beautifully decorated, sumptuous rooms.

Think about funding you won't have to repay. Look into grants available for bed and breakfasts in an historic building or in a certain area in a community. Investigate grants for hiring local contractors or college students or for using certain materials. Keep in mind that a single grant probably won't pay for your bed and breakfast, but it can reduce your costs significantly.

Consider using your retirement money. Check out using your 401K to set up a corporation. Tax law allows you to funnel money from the 401K to the corporation as long you contribute to the corporation's 401K. Be aware of the risk involved here if your bed and breakfast doesn't do well, but keep in mind that this is funding you don't have to repay. Talk to a qualified tax professional before you take the leap.

Look into a business loan. Craft a business plan to improve your chances of getting a loan and be persistent because loans for a new business are tough to get. Stick to your business plan when you get a loan and be diligent about repaying it.


If you have skills with tools and decorating, you can save money during the start-up phase.


Do market research before choosing a site for your bed and breakfast. Some locations will do well, while others won't.