How To Get Financing for a Franchise
So you’ve decided it’s time to launch your next operation, and this time it’s going to be a franchise. They offer great opportunities for new business owners to learn the best practices for bookkeeping, scheduling, managing staff, and other important skills, and they also offer a fast return on the investment costs of opening the operation if your plan is solid and you follow through with wise decisions. Franchises come with a built-in audience, but they also come with built-in costs that other kinds of companies don’t. Knowing where to go for franchise financing is one of the most important pieces of intelligence you’ll find, so you need to do your research and understand your options before making a business plan and applying for loans.
Financing From the Franchise Itself
Franchisors often provide financing options to their new franchisees, with many top brands owning or partially owning their own financing companies for the purpose. The percentage of the total cost of opening the operation they are willing to cover varies a lot from company to company, but all of them are known for making exceptions when applicants present a great case for going outside the regular guidelines. None of them make a practice of providing all the debt financing a licensee will need, though. That means you’ll need to understand your other options. In the end, you might even find that some of them offer you better rates and payment structures than the franchisor, so it pays to research franchise financing thoroughly.
Business loans for starting capital are not unheard of, but they are far more frequently granted for tangible assets. Luckily, your franchise license is one, so some banks will treat it as such when writing a secured loan. If you’re purchasing your own facilities or equipment, you can also find options for traditional secured, fixed-rate loans for those individual purchases. Many of the same lenders who offer these loans also provide business credit options beyond what you need to start up, so it can be a great way to sneak a peak at the rates and options for various business credit lines that can help your cash flow later.
Financing for Franchises
The last place to look is lenders who specifically focus on the franchise startup niche. They often provide loans with funds that can be used flexibly, so you can meet all the needs your new company encounters, from royalty payments to supplies and advertising.When you have franchise financing that’s meant for investors like you, it’s a lot easier to make your new business bloom quickly.