Hotelier turns to crowdfunding to raise refurbishment funds

Paul Knowles, who bought the 11-bedroom hotel last May, launched a crowdfunding campaign on Crowd2Fund to raise a revenue loan of £40,000 after traditional funding routes were deemed out of reach. 

"I really found it hard to raise funding to buy the business in the first place, so I knew there was no chance of getting another loan or extending the existing one with the bank," he said. 

"The frustrating thing is its a really well-performing business and generates a lot of income, so I knew that the more I could invest the more I would get out of it which is why I looked at a funding route that was more flexible." 

Revenue loan​

Glen Rothay is believed to be the first company in the UK to raise a revenue loan through crowdfunding. Knowles, who has secured investment from six sources, will repay the loan in line with the business's trading activity so he isn't locked into paying a set fee each month. 

"The interest payments are higher, but it's more sustainable," he said. "I think it's quite a clever model being based on your further revenue, rather than being like a mortgage where you pay a set fee each month regardless of your takings."  

Refurbishment​

Knowles, who previously owned B&Bs and a holiday cottage business, plans to spend the money on upgrading bedrooms and turning a function room into a restaurant at the hotel, part of which was a 16th Century inn. 

"The restaurant will need everything, from new carpets and furniture, to new cutlery, so the money will be very useful to pay for that and make it more appealing. The more customers I can get in earlier on the more revenue I make which will repay the investors sooner."