You plan to say “yes” to an exciting opportunity to buy a franchise and become a great part of “The American Dream”—owning your own business. But before you sign up, know that you will need money, often lots of it.
Before You Move Ahead
As Mark Twain once said, “The secret of getting ahead is getting started.” It is important to start smart by carefully examining your financial resources along with defining all the costs of getting your franchise going. Those costs include the initial franchise fee, and major costs like building rent, equipment, and inventory. Plus, working capital for six months to a year for operating costs while getting the business off the ground. Then, prepare a business plan that will guide your efforts and help you secure necessary franchise financing.
Tips for Getting Financing for a Franchise
Franchise financing can be obtained from these sources:
• The franchisor. Many franchisors help their new franchise members secure some partial funding.
• Franchise financing companies. Some organizations exist who are specifically focused on funding for new franchisees.
• Traditional loans. Borrowing can usually be arranged from commercial banks or credit unions.
• SBA loans. The Small Business Administration (SBA) makes SBA-backed loans available through commercial lenders, usually at more favorable rates and repayment terms compared to traditional loans.
• Alternative financing. Many online lenders offer small business financing, but their requirements can be stringent for a new franchise owner.
• Retirement funds. Certain retirement funds like a 401(K) or 403(b) retirement account can be borrowed against to fund your franchise. But be cautious with this one and consult with your tax professional.
• Friends and family resources can also be considered for funding (with appropriate relationship cautions.)
It is important to compare options and keep persevering to get the funding that you need.
Seek Expert Financial Assistance
Contact Northgate Capital Finance for financial solutions to address your capital needs. Our experienced financial professionals can help you secure funding to meet your business’s financial needs and goals.