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What Do Lenders Look for If You Want to Buy Boarding Kennels

Securing funding on a dog boarding business can demand a lot more than just a love of dogs

If you are considering opening boarding kennels, it may seem as though you need little besides space to house the dogs, room for exercise, and perhaps some part-time staff to feed and walk your canine guests.

In reality, however, buying and maintaining a successful dog boarding business can demand a lot more from you.

There may be a place for no-frills indoor/outdoor dog runs with functional bedding, but the chances are that the real profits are to be found in luxurious climate-controlled habitats with plush beds.

Boarding kennels frequently generate extra revenue by providing extras such as dog groomers who bathe and clip clients, and some kennels offer dog training as well.

So you may need to make some real investments to build a really profitable business.

How much will you need?

The cost of buying and running your business will depend on several factors:

The cost of the business itself - because it’s already an established business, you will also be buying intangible assets such as the goodwill (company name, established customer base, existing relationships and reputation).

Expansion and building costs -  you may need to consider the cost of building suitable enclosures, fencing, and add on facilities such as a grooming bay or shop.

Marketing and publicity – there will probably be a demand for your services, but you still need to help owners find you, particularly if you plan to rebrand the business or offer new services.

Additional costs - you will need to factor in the cost of business rates, insurance, staffing costs, supplies and food costs. You will also need to budget for things like property maintenance and wear and tear on fixtures and fittings.

You may be surprised at how much the costs add up to - but the good news is that there are lenders who are ready to provide the level of funding you need.

But you need to know exactly what they will be looking for when they consider your loan application.

Relevant experience

It’s easy to think that running kennels is well within the abilities of any dog lover.

Certainly, the basics of providing food, exercise, bedding, and ensuring the welfare of every animal is simple enough. However, experience with animals and some veterinary knowledge would be useful too.

You will also need some business skills. Dealing with admin and accounts, taking bookings, and managing staff are often easier if you have gained skills managing another business in the past.

Taking courses in the areas where you lack the necessary knowledge could increase your chances of being accepted by a lender.

Useful qualifications might include:

  • BTEC National Award, Certificate and Diploma in Animal Care
  • City & Guilds Certificate and Diploma in Animal and Management
  • Diploma in Work-Based Animal Care, previously NVQ

A suitable property

Lenders will want to know that they are working with a viable business and will look at the property and the location you will serve.

An area where dogs are popular would obviously have the most potential for a successful kennels.

A large property that could provide secure accommodation with sufficient room for exercise might offer the most scope for a profitable business.

Lenders may look at your choice of property as evidence of your business judgement, as well as a base for your business.

Loan security

Most lenders will expect you to invest your own money in the business to prove that you are serious about your new venture. You may need to put up 10%-20% of the total required.

The lender will also require loan security or collateral. This is something they can take and sell if you cannot make the repayment on a loan.  

A good credit history

Lenders will check to see if you or any business you’ve previously run has defaulted on loans. If this is the case, they will probably decline your application.

Late, missed, or even disputed payments will also damage your credit score and make your approval for a loan less likely.

Before you start your application run a credit check on yourself and any businesses you have been associated with.

Make sure that there are no errors dragging your score down, and if your business credit history is damaged, you need to take steps to repair it before applying.

If you do not already run a business, lenders may look at your personal credit rating. So, make sure that is spotless too.

Planning permission

The lender will want to see that you have the necessary licence and permits to allow you to operate your kennels business.

It is essential to have appropriate licences from your local council. If you want to expand your premises, they will need to be inspected.

Check whether the premises have permission to be used as boarding kennels.

A professional business plan

A formal business plan will help you focus on how you will set up and grow your business.

It will also help a potential lender understand your business proposition, and assess your chances for success.

A business plan to demonstrate that your kennels business is a sound investment should include:

  • Your potential market. How many dog owners are they in your area? How often do they need kennels?
  • How will you attract this market? Will you offer better rates? More sophisticated facilities additional services such as grooming?
  • Details of your property. Explain why it is suitable for your business plans and show the costs to acquire it, and to bring it up to the standard you need.
  • A projection for your future earnings. Calculate your annual revenue showing contingencies – how much you need if bookings are below expectation, as well as the optimistic view. Provide full breakdown of your costs, and Include tables of financial projections, a profit & loss statement and a cash flow forecast
  • Include details of your own experience, and that of any staff you will be taking on.
  • Explain how you will market the business.

Securing an offer

If you can provide an effective business plan that demonstrates your abilities and a businesslike approach, together with a sound grasp of the figures you should be able to secure the funding you need.

Look carefully at the funding offers you receive and ensure that any deal you are offered is on terms that are right for your business.

Don’t be afraid to shop around to ensure that you are not paying more than you need to, and to negotiate if you can.

A lending broker such as our partner Rangewell could help you find the most appropriate lenders.

Richard Mitchell

About the author

Richard is one of the members of the Rangewell content team. Richard has worked with international banks as well as fintech business, and now researches and writes all types of content for financial and business readers

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