How to Get Franchise Financing
Opening your own business is no easy task. Not only do you have to have a solid business plan and the proper licensing, but you also need funding. Some things can be easier if you choose a franchise over opening your own unique small business such as name recognition, a ready-made business plan and much more. There are some things that you need to keep in mind for securing franchise financing, however, such as the lender, the franchise and the paperwork.
The Right Lender
Choosing the right lender can make all the difference in securing the right funding for your franchise. This kind of funding usually comes from commercial banks and you can get the help of the Small Business Administration to secure these loans. The SBA has a variety of loan programs which may apply to your situation and can help you by guaranteeing a portion of the loan. This can help bank underwriters see you as less of a risk to lend to. You can also look into the internal financing options some big franchises offer.
The Right Franchise
Getting the right franchise financing for your needs can depend largely on the type of franchise that you want to buy. Banks will favor franchises with bigger name recognition over those with less of a presence. In addition to choosing the right franchise for financing purposes, you will want to choose one which fits your needs and the needs of your area. For instance, if you want to open a popular fast food restaurant, it is a good idea to choose a national brand with big recognition which is underserved in your area.
The Right Paperwork
To apply for almost any type of financing you will need to have the right paperwork. This includes the business plan as well as some key financial statements from you. If you already have a business, you will need to submit the books from that company as well as your personal finances so that the lender can see how credit worthy you are and what kinds of risks the underwriters are facing.
Franchise financing can help you start your business on the right foot. You will want to choose a lender which is willing to work with you to get the funds that you need and can work with the SBA to get better terms. Choosing the right franchise to open can make a big difference in the financing you can get as well as the paperwork you need to have ready to go.
