Getting into business by choosing among many franchises available to buy-into is a popular avenue for ambitious entrepreneurs across America. Of course, any business start-up requires financing, and buying franchises requires a franchise fee, among other significant costs.
Best Financing Options for Franchises
Fortunately, there are good options to consider for funding of franchises:
- One of the first and most appealing is that many franchisors offer their own financing options for both new and existing franchisees. The amount of financing, type, and qualifications differ by the franchisor.
- The Small Business Administration (SBA) offers a guarantee on loans provided through banks, credit unions, and other intermediary lenders at competitive rates and terms. One of the best types of SBA loans is the SBA 7(a) loan, enabling a recipient to obtain up to $5 million, with repayment terms from 7 to 25 years.
- Conventional loans from banks and credit unions also are available, but typically come with higher interest rates compared to SBA loans.
- A home equity loan may be available, but one of these typically only provides a lending amount of 80 percent of the value of your home.
- Rolling over funds from your retirement account can be obtained through Rollovers As Business Startups (ROBS) funding.
- Online loans are available from many lenders, making it easier to shop for loans.
- Other sources of funding for franchises include crowdsourcing, forming a partnership, and friends and family funding.
How to Apply for Funding
Applying for funding of franchises involves some key elements:
- Have a business plan and specific use of funding.
- Know the borrowing amount needed for the franchises.
- Calculate affordable monthly payments.
- Choose the right kind of loan.
- Find the right lender.
- Have a strong business credit score.
- Be prepared to offer up collateral.
- Provide proper documentation.
Seek Expert Funding Assistance
Contact Evolt Capital, based in Chicago, IL for fast, innovative, and customized financing solutions. We provide financing for franchises, working capital, and other business loans that help people to embrace new opportunities and achieve long-term success.