Franchise is mainly defined as a business, for which any person is licensed by the larger firms to operate under its name. For the franchise licensee, you have to operate the business and in some instances, work on the brick and mortar location. Even without any of the physical storefront, stating any franchise is always in need of some monetary help and support from anyone you know. You will come across so many ways in which you can finance a franchise, mainly for the entrepreneurs out there.
Along with using the savings that you have with the existing assets under your name, there are grants and loan available from multiple sources out there in the market. It is time for you to just utilize some of the following methods, which are proven right to raise enough capital for starting your very own business with ease.If you are an entrepreneur and new in this business of holding a franchisee, you better get these points right. To help you learn more about this process and get the thoughts covered by experts in town, you are cordially invited to catch up with Liberty Lending US and get some help right now or never!
Arranging one financing with the franchisor:
You have to just understand what financing the chosen franchisor is here to offer you with. The place, which the most franchise licensees will try to start looking for financing is right with the franchisor company itself. There are so many people out there, ready to offer you with loans through the own finance companies or even the third party financiers, with better business relationships with. This service might help in covering one significant portion of the current startup costs.
- Franchisors are always asked to have agreements all set up with the firms, which can lease some of the best equipment that you need for getting the franchise up and full operational in every way possible.
- Each franchise happens to have its very own package ready in terms of what will turn out to be a new franchise licensee. You can always check right into what the firm needs to offer.
- This information is always made available right online and in some of the other documents, as provided with the current franchise application. Or there are chances that you might need to request the same.
Checking out on down payment and some of the collateral requirements:
Franchisors are always here to demonstrate that you might have some collateral for allowing them to just recoup their money or the franchise might end up failing. There are so many which might require that you put right down a down-payment of the money you already had listed under your name and have not borrowed from any other source. For example, you have McDonald, the famous fast food joint, which requires new franchise licensees for paying around 25% of costs of franchise right out of pocket and in cash. It ensures that the franchises will only go to people with requisite resources for the payments now.
Get to apply for financing:
You have to be sure to complete some of the necessary forms for applying for financing from franchisor. This sector is subject to vary, depending on the company. Information about how you can apply for financing might be well included right in Franchise Disclosure Statement. If not, then you might have to request for the same from company you have chosen.
- Do you know what franchise disclosure statement actually is? It is mainly a document, which you might receive from the said company in case the franchise application gets approved. It helps in spelling out right in minute details about specifies of the franchise based agreement. It is always mandate that all franchisors have to provide the same document to licensees, as per Federal Trade Commission.
- Just like with any other form of application for loans you are always expected to provide some better and accurate information regarding the financial history, assets that you generally own under your name and the calculated net worth of it all.
Secure the outside financing right now:
For securing outside finance, you have to first apply for a bank loan. Another option that you care to consider for financing new franchise is standardized smaller business loan right from bank. Mainly if you have well rating and opening franchise with positive reputation, then banks won’t think twice before offering you with some starting capital instantly. But you have to work hard to create that worth first under your name.
Most of the times, the banks offering loans of such sort will ask you to catch up with some collateral, like stocks, home or bonds that you might own. Sometimes, they might want you to pat an amount of around 20% of cost of just starting franchise from own money that you have, just to be certain that you have the capability to cover some of the major business costs. These loans are widely in need of you to establish a proper relationship with the said banker.
Time to apply for SBA loan:
In case, the banks failed to offer you with the loan you want, you can secure loan through Small Business Administration or USA SBA loan. These loans are well disbursed by credit unions and banks but are then well guaranteed against the default by some of the federal government.
- These loans are available for franchising licensees to open any business on franchise registry of the SBA.
- You have the right to borrow money from hundred thousand to millions as well through this program.
- The loans primarily have a maturity period of 5 years so they can work great as startup costs but not suitable for any longer time expenditure.
Be sure to learn more about not just SBA loans but some of the other monetary programs, which will help you to hold on a strong base for sure.
About The Author
Marina Thomas
Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including money saving, Budgeting, business debt consolidation, business and start-ups.
