Getting Franchise Loans for Your New Business
So you find yourself faced with owning and operating a new business as a franchisee. While there is much to be proud of and excited about, you will undoubtedly be faced with many new challenges too. Aside from administrative, legal and logistical concerns, you will need a cash infusion of one sort or another for your new business. In some instances, franchisors themselves put up the money to finance new business enterprises, but this represents only a small segment of the franchise industry, so be sure to discuss this up front. Generally, new business franchisees find themselves in need of franchise loans.
How to Prep For Applying for a Franchise Loan
Before you enlist the financial assistance of a bank or other financial institution, review your credit standing. A solid credit rating, along with business plans, financial projections and a demonstration of your business and project management skills will help get you poised for success. You should realistically know that there will be unexpected costs involved in the franchise, and that any new business enterprise goes through a ramp-up period where things may not go as smoothly as planned. It might be helpful to enlist the advice of other franchisees and even your franchisor as you prepare to ask for franchise loans.
Different Means to an End
In addition to commercial banks and other more common lending institutions, there are lenders in the franchise industry that now include companies exclusively dedicated to helping new business franchisees secure financing. Documentation can be easily uploaded online to these companies, who in turn review the information and match their various lenders nationwide with qualified applicants. Sometimes such lenders can get you the money you need very quickly – in some cases, just 48 hours.
Will I Have More Than One Option?
Whatever lender you ultimately seek franchise loans from will assess your criteria and make different loan options available to you based on this information. Options will include unsecured, risky loans as well as secured loans in which you will be expected to offer collateral, usually in the form of a mortgage on your home or other asset. If your new business employs fewer than 500 employees, it could meet the criteria for a Small Business Association (SBA) loan. SBA loans are partially backed by the United States Small Business Association in case the borrower defaults. SBA loans are known to be less risky than traditional loans and may be the ideal option for your new business.
Preparation and patience will both go a long way in helping you succeed when looking for franchising financing. To learn more about franchise financing options, contact Muth Capital today!