Franchise Financing: Get the Capital you Need
As far as business options go, franchises are an interesting choice. Unlike starting a new business from scratch, a franchise allows you the opportunity to take a “ready made” business model and put it into effect. There are tons of amazing corporations out there looking for willing and able individuals to open and run their various franchise locations. Of course, you are going to need to take care of the financing on your own. Franchise financing is often a bit easier than finding funds for other types of businesses because the franchise name is usually one of general recognition.
To find the best source of capital for your plans, you have to look over a few different options. Weigh out the pros and cons of these choices and see which is best for beginning an adventure with your new franchise.
For the most part, a franchise is going to be connected to a large chain with which consumers and lenders already have some level of familiarity. If you want to open a McDonald’s Restaurant, for example, you are more likely to get a loan than if you were simply attempting to open a totally new restaurant. This also means you can apply for loans through larger organizations in the hopes of being approved. SBA loans are a great fit here, as they are structured to have sensible interest rates and helpful repayment schedules.
Applying for an SBA loan for a big-name franchise is not a guarantee, of course. You still need to make sure you have decent credit and enough cash for a down payment. Before you apply for any type of loan, look over your current credit score and see whether or not you are going to qualify for franchise financing options. This will help to give you a general idea of what you can expect when you begin the process of applying for these loans.
While franchises are usually name brands, there are times when new companies will create franchising options to open more stores and become more recognizable. If this is the case, you most likely are not going to qualify for traditional SBA loans. Many financial professionals suggest using ROBS for this type of plan, which help to pay for loans through various retirement funds and 401k plans. Learn more about how ROBS are structured to see if they make sense for your franchise financing needs.
Opening a franchise might be easier than starting a new business out a plan, but it is still tough to get the best financing. Explore all options before making your choice and see what your best bet is to obtain cash.