Find a franchise opportunity
Financing your Franchise, Where To Get The Money For Your New Business Venture
You know you want to own your own company. You've done your research and decided franchising is the way to go. But before you can sign on the dotted line, you need the money to finance the franchise. So where are you going to get it?
Your Franchisor
Though most U.S. franchisors provide debt financing only,
franchisors can help in other ways such as offering financing plans
for equipment, the franchise fee, operational costs or a
combination. Start by asking the franchisor if they offer any plans to
minimize your financial risks. For example, Spring-Green Lawn Care
offers "Flex Start," an innovative program which allows Spring-Green
franchisees who open their business late in the season to operate in a
part-time capacity until January 1 of the following year. Flex Start
franchisees learn all business facets while operating part-time while
allowing franchisees to keep their jobs and launch their Spring-Green
careers at the same time.
Military-Centric Programs
If you have a military background, make sure to mention it because
veterans often receive discounts. Consider utilizing the IFA's VetFran
program, which offers discounts at over 1,000 different franchise
concepts. The criteria for financial incentives is determined by the
franchise system in a manner that allows the greatest flexibility for
the system and, at the same time, offers veterans a better deal than
is offered to otherwise qualified investors; typically, VetFran
participants offer discounts of their initial fees but that is not a
requirement. Some franchisors also offer their own programs for
veterans, like Spring-Green's Military Assistance Program
(M.A.P.). M.A.P. provides a grant from Spring-Green towards the
initial franchise investment. After working with the franchisor and
determining the extent of financing available from them, other sources
of capital include friends and family, home mortgages, veterans'
loans, bank loans, SBA loans and finance companies.
SBA-Guaranteed Loans and the Patriot Express Loan Initiative
SBA-guaranteed loans are term loans from a bank or commercial
lending institution of up to 10 years, with the Small Business
Administration (SBA) guaranteeing as much as 80 percent of the loan
principal. Often, banks that aren't willing to work with you become
more agreeable if you suggest working with an SBA loan guarantee.
These loans are comparatively inexpensive and best for purchasing
equipment, financing the purchase of a business and in certain
instances, working capital. The SBA guarantee can help borrowers
overcome the problems of a weak loan application associated with
inadequate collateral or limited operating history. Veterans should
also consider the SBA's new Patriot Express loan, which is offered by
SBA's network of participating lenders nationwide and features a rapid
turnaround on approval for loans up to $500,000 fastest turnaround
time for loan approvals. The Patriot Express loan features lowest
interest rates for business loans – generally 2.25 percent to 4.75
percent over prime – and can be used for start-up, expansion,
equipment purchases, working capital, inventory and business-occupied
real-estate purchases.
Friends & Family
Many entrepreneurs turn to friends and relatives. If you have people
available, definitely talk to them about borrowing, but make sure you
can repay the debt to avoid any damage to the relationship.
Featured Opportunities
