Franchise Funding Options

There are many franchise funding options that you can pursue if you are interested in purchasing a franchise. Many times, coming up with the money to make the initial purchase is the biggest issue that people have to deal with. Getting access to the money at a reasonable price is important if you want to be successful in your new business. Here are a few options that you could look at if you are interested in franchise funding.

Franchise Loan

One option that you might be able to pursue is a franchise loan. If you have a good business model and good credit, you may be able to secure a loan for the entire amount that you need. These loans are offered at traditional lenders. You should shop around your local market, as well as online. If you are working with a particular franchise, you may be able to find a loan through one of their lending programs. Many franchises have lenders that commonly work with them, so it should be easier to get the money you need. 

SBA Loan

Another option that you might consider is a loan with the Small Business Administration. The SBA is a government program that is tasked with the responsibility of helping small business owners. They do not actually lend money, but they guarantee loans that are issued by traditional banks. You can go into a regular lender and get an SBA loan through them. Since the SBA will be standing behind it, you are more likely to get approved. These loans have competitive interest rates and low down payments associated with them.

Home Equity

If you cannot get approved for a business loan, you might think about using your home equity. If you have owned your house for a number of years you most likely have some equity built up. In this case, you can take out a home-equity loan or a home-equity line of credit. You can then use the money to pay for the franchise and pay back the loan with the profits. 

Private Capital

In some cases, you may be able to gain access to venture capital. There are individual investors out there that have excess money to lend but they do not necessarily want to run a business. You can partner up with these individuals and start a business. They will provide the money that you need for the business and you can provide the hard work. 

You might be able to find an individual investor or a group of investors that would be willing to put money into your new business.

You may also be able to get help from a family member that wants to invest. If you set up a loan with a family member, make sure that they know that you will repay them according to the terms that you agree on. Just because you are working with a family member it does not necessarily mean that you should be informal with the process. This could be a winning business transaction for both parties.

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