Most people that want to start a franchise don’t have the money or don’t know exactly what to do or wear to go to get the funding for a franchise. So I figured I would help you out and provide you with some insight on where to go to get some finances to start your franchise.
Franchisor financing
Most franchises partner with preferred lenders and banks to administer the loans for their franchise but sometimes you can get a loan directly through the actual parent company of the franchise.
Commercial bank loans
For most commercial bank loans you will need to have a detailed business plan plus good credit to get a loan with this route. Most franchise business owners struggle with securing a commercial bank loan. Small Business Association (SBA) loans there are two different types of SBA loans. There is the Type 7(a) loans which are ideal for new franchises because they have less limitations compared to the Type 504 loans which have more limitations. Because these loans are partially backed by the Federal government they have more favorable Interest rates then your regular commercial banks.
Alternative lenders
If you don’t mind paying a higher interest rate then an alternative lender might be the go for you, Even though the repayment periods are shorter the approval recess is faster and less restrictive with the approvals.
Personal assets
Even though this is a clear path to destroying your future financial security personal assets can be used to start any business not just a franchise. Even though franchises can be less risky due to the fact that there is way more research on this business. These companies usually have a good understanding of what it takes to be successful in that particular business.
Savings, severance packages from previous employers and home equity can be used to start a franchise but like I said this is not the most ideal way to fund your franchise with personal assets.
Rollovers as business startup (ROBS)
Even though this method is considered questionable by the IRS the ROBS is a method of withdrawing money from a 401(k) or other retirement savings accounts to fund a new business without incurring penalties. Rollovers are risky if not done correctly so be careful and ask a professional financial advisor for more information before even attempting this.
Crowdfunding
This is a great option for the franchisee that wants to use other peoples money but doesn’t want to use his credit. These online forums like Start Engine, Indiegogo, Seedinvest and others are a great way to source funding for your franchise without using your own credit.
Friends and family
Borrowing from friends and family is an attractive choice for those who have poor credit ratings or can’t afford to pay interest. This type of funding can negatively impact personal relationships though, especially if the venture isn’t successful.
Fundwise is the best option to fund your Franchise
- Up to $250,000 in unsecured credit lines
- Funding Manager to answer all of your questions
- A qualified team working to get you the best funding available.
About Our Credit Lines
- Grow your business with up to $250,000
- Easier to qualify for than normal loans
- Start fast, don’t miss opportunities
- Funding as fast as 10 business days
Common Uses
- Start a new business
- Marketing to new clients
- Buying new equipment or supplies
- Creating new products or services
Requirements
- 650+ Fico Score
- No derogatory credit marks within 6 months
- No judgements, collections, or tax liens in unpaid status
- No bankruptcies reporting
With all that being said check out the link below to find out more information.
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