Secure the Funding You Need To Buy a Franchise
In the concept of buying a business franchise, the franchisor (business owner) gives authority to the franchisee to use their name, products, and brand. Besides the franchise agreement signed by both parties, there are fees that come with buying a franchise, including a franchise fee and costs associated with loyalty and advertisements. Finding the best company to franchise is hard, but getting the appropriate franchise financing is harder. Fortunately, today there are several options available that are specifically tailored to fund franchise purchases.
There are several SBA loans available for new businesses, just like commercial banks, credit unions, and other lenders. However, the most common is the 7(a) SBA loan. As a new franchisee, you can apply for an SBA loan through your lender.
From the Franchisor
Some franchisors take some measures to help new franchisees, for instance, by waiving the franchise fee. Others liaise with banks and financial institutions to help their new partners access franchise funding. The information about the new entrepreneurs who the company has helped is available on its website and its franchise agreement’s chapter ten.
Besides the SBA loans, commercial banks, credit unions, and other financial institutions have monetary products for franchise financing. It is even deemed that new franchisees have a higher chance of acquiring financing from commercial banks as compared to new businesses. However, despite that favor, you still have to comply with the bank’s lending policies and underwriting dictated.
Franchise Financing Organizations
It’s no surprise that some financing companies specifically deal with giving loans to new franchise businesses. Such firms have the power to also give loans directly to business start-ups.
Steps to take to Qualify for Franchise Financing
As a new franchisee, following the below tips will increase your chances of qualifying for funding:
- Use the Company’s Name – Dealing with a reputable company helps you qualify for financing easily.
- Check for SBA approval – Not all companies are registered and approved by the SBA. Buying a franchise from an SBA-approved organization can facilitate your funding qualification.
- Understand the required collateral – You are in a better position of getting funded if you have assets whose total value is or close to that of the business you want to fund.
- Look for a franchisor that can pay the suppliers directly instead of giving you a general loan.
Buying a franchise is a wise and lucrative idea, but you need to know how you can acquire franchise financing. Contact Diamond Capital Financing today to get more answers on this subject.