When you do not want to start a business from scratch, but you can not find an existing company that appeals to your business sense, there may be a franchise that could entice you. Since there are many well-known brands available for entrepreneurial investment into the world of franchises, the decision comes down to what you know and what you love to do. Once you choose which type of business opportunity is right for you, the next step is getting franchise financing. Here are a few places that may be the right fit.
Small Business Administration Loans
Small business owners and beginning entrepreneurs often turn to the SBA for loans because they are so much easier to qualify for than traditional loans. Many start-up company owners have little or no down payment and can provide no collateral. The SBA guarantees the bank or credit union-backed loans, but the terms of this type of lender provided money often has a low-interest rate and long repayment conditions. This loan can also be processed quite quickly, providing you the ability to get the money within weeks, rather than months.
Traditional Large Bank Loans
Traditional loans through credit unions or large banks have been the standard for many years. Though more difficult to come by than the SBA loan, if the bank is associated with the franchise parent company, loans can more easily be obtained upon approval. Good credit scores and stellar payment history are often essential for this type of franchise financing loan.
Retirement Account Borrowing
Thinking outside the box often brings many people to consider funding the start-up franchise costs with money from friends, family members, or taking on a business partner. Entrepreneurs may also choose to borrow from their workplace retirements accounts such as a 401(k) or IRA. There may be a tax payment on the money, but no interest or penalties.
Franchisor Owner Loan Assistance
If the franchise you wish to purchase is part of a large brand, the franchisor may offer financial assistance. Some companies offer small loans, while others may offer to cover the whole cost. Repayment schedules can seriously impact your income ratio, so make sure to look at the loan details before you sign on the bottom line. Also, check to see if there are incentive programs or discounts if you are a veteran, first-time business owner, or minority.
Opening a business can be an exciting venture if you find the right type of franchise financing. With a little legwork and a whole lot of reading, you can find a lending institution that fits your needs.