There are many benefits to becoming a franchisor. In addition to having the guidance of the successful parent company. It offers you the ability to diversify your real estate portfolio and thus spread out your risk. By taking on another company’s a product/service. You are being gifted with free promotion and using it to sell a product that has been time-tested and been proven to be in-demand. All that’s left to do is to obtain funding. This is where select franchise funding options come into play.
Traditional Loans Can Serve as Franchise Financing
This is the standard method of obtaining funding for starting franchisors. The federal Small Business Administration (SBA) has compiled information showing a distinct tendency towards commercial loans. Of course, if you go this route, you will still have to deal with often exorbitant qualification requirements. In some cases, even with a good credit history, collateral may be necessary to secure an adequate loan.
The Federal Route: Small Business Administration (SBA)
Specifically, this refers to the SBA 7(a) loan from the federal government. Although the government, itself, doesn’t provide the funds. They DO provide the backing, which means you can obtain the best interest rates on the land. Insofar as franchise financing is concerned, it’s hard to do better than this. The loan, itself, is provided to you by robust financial institutions (credit unions, lenders, etc) with the US government as your cosigner.
During your vetting phase, as you’re searching for the franchise in which you are interested. Check to see if they are FBA-approved – this will go a long way in helping you to secure funding. To facilitate business, even more, you might consider a franchise that pays the suppliers. Ultimately, reducing your investment, and often makes delivery and logistics a smooth process. For more information on the ins and outs of franchise financing, contact the experts at Crimson Stone Capital Solutions.