Some Useful Ideas To Finance Your Franchise Business

There are plenty of ideas that might just work for you and help you finance your franchise business. You are all set to run a franchise business; you have everything what it takes to run it, but you may still be wondering where to get the start-up funds. But, before you go ahead and start reviewing the different options, you are advised to first do the basic calculations. For example, you must have a clear picture about how much money you will need. Make sure you take all necessary factors into account while you are doing this calculation. Some of the important factors to consider here include advertising fees charged by the franchise, royalty payments to the franchisor, the franchise fee to open the business, and other such things. Now, following is a brief rundown on some of the funding sources.

Financing Through The Franchisor

Though in most cases, franchisors are unlikely to finance your franchise business, you are still advised to talk to them about it. If you have a great business plan and you succeed in convincing the franchisor that you are going to take their business to the next level, the franchisor may consider assisting you with the funds. There are many franchisors who also provide financing; for example, 7 Eleven provides assistance with payroll, accounts receivable, and finance inventory. Subway even helps with the start-up costs.

Utilize Your Good Credit

If you have an impressive credit history and a high FICO score, you may qualify for a loan from bank. Getting financing for a franchise business from a bank is usually not an easy option just on the basis of your business plan. So, if you do not have a good credit score, you may consider putting your home equity at work. You can get a home equity loan, which is a secured loan, where you have to put your home as collateral against the money borrowed. This can be a little risky, as you may end up losing your home in case your business fails and you do not make repay the loan in time.

SBA’s Franchise History

SBA stands for Small Business Administration. You can also contact them and request them to finance your franchise business. You can get the funds quite easily, especially if the franchise you are considering buying is registered with the SBA.

Third Party Financing

There are several companies out there (third parties) that may also be willing to offer financing assistance for you. Some most common names include Edlo Leasing, Banco Popular, Textron, GE Capital, and others. You may also like to contact a franchise broker to get more ideas in this regard.

In case, nothing works for you, you should try and find out a venture capital investor. This investor provides financing for your business and they get a share in the profit. This can turn out to be the most expensive option to finance your franchise business, but when you have no better alternatives, you may like to consider it.