How to Get the Capital You Need to Start a Franchise
Financing a franchise can be an expensive proposition. From startup costs to renovations to daily operating expenses, you need to find competitive financing to secure your franchising future. Whether you’re just starting your first franchise or looking to expand your successful business operation, learn how to receive the best franchise financing today.
First, you need to be familiar with your franchise disclosure document. This invaluable document detailed everything you need to know from an investment standpoint. Your franchise brand should have all the details laid out about your expected costs for starting and operating a franchise. Once you determine how those costs will affect your current situation you can begin to look for the funding you need to make your business thrive.
Nearly every franchise has a franchise fee. This fee is an upfront cost that is required to buy into the franchise model. After that, you’ll need financing for purchasing or constructing the building, buying any necessary inventory and equipment, hiring all the necessary employees and paying for the marketing materials you need to promote your business.
Applying for franchise financing requires details about your financial history, work experience, and financial projections. You’ll want to show not only how much you expect your franchise location to earn, but also any other form of income you receive or have been receiving. This can help your application appear more reliable and show your financing institution how you expect to repay your loan.
Consider whether you’ll be applying for a loan that is secured or unsecured. A secured loan will require you to put your building, equipment or another asset as backing for the loan. This can give you a stronger application and higher loan limit, but could risk losing your entire franchise location should you default on the loan. Unsecured loans typically have lower loan limits, higher interest rates and are more difficult to be approved for. Your application will determine the amount of credit you’re approved for as well as the interest rate that will be applied to your loan. Don’t forget to show your past work history and how you plan on marketing and growing your franchise effectively.
Whether you choose franchise financing from a private institution, traditional bank or SBA loan, find the financing that provides competitive rates and provides you with the capital you need to thrive in a competitive market. Owning a franchise can be an exciting way to not only earn additional income but also provide employment to many individuals in your local community.
