Buying a franchise appeals to thousands of individuals every year as a great way to get into business. Franchising is attractive because it offers the independence and flexibility of business ownership while providing the security and strength of an established brand. Franchising, however, is not inexpensive. Indeed, significant financing is required to pay for the franchise fee, advertising fees, and extensive operating costs. Most franchisees will need to get a franchise loan to begin their exciting journey as a franchise owner.
Franchise Loan and Financing Sources
Securing franchise financing can be accomplished in these ways:
Franchisor financing. Some franchisors offer financing either through their established lender partnerships such as commercial banks or, occasionally, by the corporation itself.
Franchise financing companies. Some companies specialize in providing a franchise loan to qualified applicants either by lending directly or by matching them with other lenders.
Traditional loans. Traditional commercial loans are available through banks, credit unions, and online lenders.
SBA Loans. The Small Business Administration (SBA) is specifically focused on small businesses and it backs loans through its partner lenders, including banks and credit unions. SBA loans are especially attractive because they come with lower interest rates and more favorable repayment terms than traditional franchise loans.
Alternative lenders. Non-traditional alternative lenders can provide a custom franchise loan for qualified applicants.
Alternative financing sources. For those individuals that may not qualify for a traditional loan, the following options can be considered:
A home equity loan or line of credit.
Rollovers as Business Startups (ROBS) plan.
Friends and family funding.
How to Get Approved for a Franchise Loan
Getting approved for a franchise loan takes these steps:
Write a strong business plan with solid financials. Determine the amount of funding you need.
Carefully review available funding sources and determine your eligibility.
Apply to more than one lender.
Seek Expert Funding Assistance
Contact POM Capital & Finding Services to help achieve your business goals. Experienced professionals with great solutions tailored to your startup financial needs.