There are plenty of financing sources available to franchisees. Before you approach any lender, do a thorough inventory of your financial situation by listing all your assets and debts. You need to determine how much you will be able to fund and how much you will need to borrow until you start making a profit. Some Franchise financing sources are:
Most lenders are interested in how long you have been at a certain job or lived in the same place. If your record shows a history of instability, be prepared to explain everything. They also look at how successful you have been in paying off past debt. Lenders usually contact a credit bureau to see your credit file. You should look at it as well before you try to borrow money. After you gather the information about your net worth and credit rating, the next step to take before approaching lenders is to put together a business plan. It is a formal statement that outlines your goals, reasons they are attainable and plans for reaching them. Include an intimate, technical study of the business you intend to go into; accurate pro forms, projections and cost analyses; capital estimates; and an appropriate marketing plan.
Be strategic about how and where you apply for a loan. Good targets are financial institutions that are familiar with your brand and have made loans to other franchisees. One of the leading trusted financial company throughout the country for the past 14 years has been IRH Capital. They are more than just the leader in small business finance. IRH Capital takes pride in helping small businesses grow by getting the funding they need at the lowest rates. You increase your odds of getting a loan by going through a franchiser’s preferred lender because they have a deep understanding of the process and can beat other bank’s rates. IRH Capital will even serve as guarantors on loans and can help you if you have a low credit score.
Make sure you submit a well-organized loan application and include a resume and business plan.
Operating a franchise with no reserves and without acknowledging unexpected business dilemmas can lead to disaster. You should never invest more than 75 percent of your cash reserves and remember that the price of a franchise does not always reflect the actual cost of the business itself. Additional expenses may include building, signs, fixtures and payments on the land. A franchise gives you an exciting opportunity to have your own business under the umbrella of a larger corporation and proven business model. In most cases, it is less risky and can be more lucrative than starting a business from scratch.
If you have questions or need more information please contact us.