How to Fund Your Franchise the Right Way
You’ve decided that you want to own your own business and have identified franchising as the right path forward. But now you need to find the funding to get your dream off the ground. Starting a business is hard when you don’t have the right amount of capital, but you can get around this problem. Here are some ways that you can fund a franchise.
Check Your Personal Finances
You’ll want to start by checking your own financial position. This will give you an idea of how much funding you can generate from your own resources. You should then be able to identify any financing needs you might have, such as refinancing your existing debt, reducing monthly expenses, or paying off a home equity loan. You’ll want to know how much of your own money you can bring to the table and how much you’ll need to borrow.
Borrow From Family and Friends
If you have family and friends who are willing to lend you money, that’s a great place to start. Just be aware of the risk that you’ll be asking them to take on more than they’d like. If you owe a lot of money to family and friends, you may find that you experience some awkwardness in your relationship with them. You may want to consider a promissory note when you borrow from people. A formalized document can help to protect both parties in case of later misunderstanding.
Go to a Lender
Oftentimes, taking an official loan is the best way to go. If you’re looking to fund a franchise with a relatively low amount of money, you may want to consider a Small Business Administration (SBA) loan. These loans often have more flexible terms than other types of loans. The problem is that the paperwork and approval process can be too cumbersome for some business owners, especially if your lender is not SBA-approved. If you have trouble getting an SBA loan, there are plenty of lenders who can provide faster and easier solutions. Just makes sure that you can make your payments in a timely manner before signing the dotted line.
Determining how to fund a franchise can be a difficult process, with many potential paths available. So, before you take the plunge, it’s important to find the right financing solution. By taking the time to assess your own financial position, you can identify ways that you can get your business off the ground without hurting your wallet.