Creative Ways to Fund Your Franchise
To many entrepreneurs, opening a franchise of an existing corporation is an enticing opportunity. You enjoy independence and flexibility as the owner of a small business, but you also obtain stability and support as part of a larger company. However, starting a franchise requires a sizeable franchise fee as well as other substantial costs. Here are some of the best options for obtaining franchise funding.
Borrow from the Franchisor
Borrowing the funds you need from the prospective franchisor is one of the most effective methods of franchise funding. Corporations that have franchise models are familiar with the costs as well as the risks of setting up a new business. Many of them offer assistance with funding so you can afford the fees, equipment, inventory, and other items you need to get started.
Apply for an SBA Loan
Apart from direct funding from the corporation offering the franchise, a U.S. Small Business Administration-backed loan is an extremely desirable option. Keep in mind, though, that the standards for qualification are strict, and the process of an application takes a long time.
Obtain a Bank Loan
A term loan from a traditional bank is an effective franchise funding tool. You receive your financing in a lump sum that you pay back in monthly installments with interest. When you apply for a loan, you should have a business plan ready. The lender will also want to review your credit history.
Approach Alternative Lenders
If you are unable to qualify for a traditional bank loan and are in a hurry to obtain franchise funding, you can apply to an alternative lender for financing. A range of funding products is available, including term loans, lines of credit, and equipment financing.
Ask Family and Friends
It is common for entrepreneurs to ask family and friends for franchise funding. To avoid relationship-straining disagreements, though, be sure to delineate the terms and conditions of the loan in a written contract.
Raise What You Need Through Crowdfunding
Crowdfunding allows you to raise the funding you need from numerous individual investors. Look for an online platform that offers crowdfunding assistance for businesses.
For more advice on franchise funding, contact Quick Capital Funds.