Starting a franchise is a great way to launch a new business while having the built-in support of an already established brand. Fortunately, if you’re interested in becoming a franchisee, you have many financing options, such as the following.
Funding from the Franchisor
Sometimes it’s best to go straight to the source. Many franchisors deliver financing directly to their franchisees. That can be a great option, especially if the franchisor offers perks like deferred payments.
SBA Financial Assistance
Operators involved in certain franchise chains are eligible for assistance from the Small Business Administration (SBA). The SBA helps new businesses by backing loans, thereby making loans less risky for lenders and more obtainable for borrowers. If you’re interested in this option, be sure to check out the SBA’s list of eligible franchise types.
Funding from Alternative Lenders
Alternative lenders are where many business owners, including franchisees, turn. Alternative lenders offer a mixture of speed and lower application requirements that lots of borrowers find appealing, especially those who find themselves turned away by other lenders.
Borrowing from Family and Friends
Depending on the financial situation of your family and friends, it may be worth asking them for a loan or an outright gift. However, as is the case with any large financial transaction, you should carefully weigh the pros and cons: The involvement of money can complicate any relationship, and even if you trust the giver of the funds, you should record all agreements in writing.
Turn to Investors
Would-be franchise operators may also turn to investors. It’s advisable to research the legal and financial implications of this approach. For tips on finding investors, check out this article.
Traditional banks are another option. They carefully evaluate borrowers’ business documents and credit history, which means qualifying may be tricky, but this may be a worthwhile avenue to explore if your financial record is strong.
Finding Your Financial Partner
Starting any type of business is easier with a good financial partner at your side. If you’re looking for such a partner, please reach out to Commercial One Group today!