The Facts About Franchise Financing
Franchises make up an interesting sector of the business world. On one hand, they can be just like any other small business in that they take on many of the same risks. They may struggle to survive financially, and inexperienced leadership can lead to disappointment. On the other hand, franchises can do well because of a pre-established successful presence. They also have the support and guidance of a large company. While this may feel constricting for some, others are glad to take advantage of all the resources they are offered. If you’ve decided to invest in a franchise, you may be looking for franchise financing. Here are a few aspects to consider.
The franchise corporation can be a wealth of information, and you can look at the success of other investors to learn what kinds of funds you’ll need to get started. The parent corporation may be able to steer you in the right direction as far as lending institutions, and they may even have programs in place to help you get the capital you need. If you still need to research your options, there are several types of lenders that could be the right fit.
Traditional bank loans can appear quite harsh and constricting in comparison to some of today’s other options, but they’re traditional for a reason. For the qualified, they work, even if the processing time may be a bit longer. This could be the right choice for you if you have a good credit score, a considerable down payment, assets in your name, a solid business plan and a notoriously successful franchise in mind. If you’ve applied for traditional bank loans for franchise financing without luck, you may want to look into the SBA loan programs. They can help small businesses find loans, and it’s not incredibly difficult to qualify.
If you don’t have assets to use as collateral and are working within a shorter time frame, you can look into lenders that work specifically with franchises. Their experience within the industry can be beneficial, even though their rates may be higher. There are other types of alternative lending that are becoming more popular. Crowdfunding can be a great option if you have a strong presence in your local community and you’ve established interest in your franchise endeavor. You can also pursue lines of credit, short-term loans or finance your equipment.
Though securing a large amount of capital can be daunting, you have plenty of accessible options for your franchise financing.