So you’ve just been approved for a franchise or are looking to get started in franchising, but need help navigating the franchise financing world? Here’s a quick rundown of where you can secure franchise financing in order to fund your new business.
The Franchisor
Most large and well established franchising companies offer their own franchise financing option. They often come with incentives (e.g., guarantee programs, waived/partial franchising fee, etc) and are there throughout the entire financing and building process. If this is an available option, it will be listed on the franchisor’s website.
Traditional Loans
When borrowing from commercial banks, they will look into the business opportunity itself, likelihood of success, your credit history, income and, possibly, collateral. The majority of franchisees obtain franchise financing through traditional loans as they are highly favored by banks. A large part of the “trust” extended rests in the credibility of the big name and brand behind individual franchise.
SBA 7(a) Loans
If you’re looking to obtain franchise financing via SBA loans, it’s important to choose a franchisor that is on the approved list of franchising options prior to applying with the franchisor. These government backed commercial loans offer long terms, favorable repayment structures and low interests which make them highly competitive.
Franchise Financing Companies
These companies specialized in finding funding for franchisees and matching them with necessary, or desired, services and products. The agent typically stays on board throughout the whole process, building a relationships that makes lending easier in the future.
When deciding upon a franchise and franchise financing, make your overall selection based on overall success rate. How many franchisees see success, last beyond 5 years or go on to open additional locations? What is the completion rate among franchisees who finance through your company/program? Knowing what to expect will help you plan and prepare for franchising success.
Contact BT84 Commercial Capital & Business Solutions to get the financing you need for your franchise.