Franchise Financing Facts for Entrepreneurs

There are all types of ways for aspiring entrepreneurs to break into business for themselves. However, one of the safest routes to consider is becoming a franchise owner. Franchising has distinct advantages over other types of business ownership, and with careful research into your market and product, you could be well on your way to realizing your dream. Here are some fun franchise financing facts to put you on the fast track to ownership.

Ready Made Business Model

Lenders are often attracted to franchise requests because of the reliability of the product market. What makes franchise owners so successful is that they already have blue print models for success from their parent corporation. Much of the legwork is already done in terms of market research, product, merchandising, and distributors. There’s even already a business plan that franchisees only need to customize to their specific location. The success of the business depends only on the location and the success of the parent company itself.

Plenty of Financing to Choose From

Another option that makes franchises so appealing is that there are number of financing options available. Because of a franchise’s reputation, traditional lenders may be willing to invest in an entrepreneur as long as the person has a steady financial record. Outside of traditional lenders, there are also alternative lending options available. One of the largest investment options for franchise owners is the parent company itself, which may often offer financing with low interest rates, equipment rental, or other perks. Outside of traditional banks and the parent company, there are also lenders who specialize in lending to franchises.

Other options for financing include looking for grants that support small businesses or the federal government’s Small Business Administration’s 7(a) Loan Program, commonly known as an SBA loan. Grant programs do not have to be paid back as long as certain criteria are met, whether it is hiring minorities, veterans, women, or any other specialized group or underrepresented area. SBA loans are partially guaranteed by the government, so in the event that the franchise fails or the loan defaults, lending institutions received a portion of their investment back.

There are even more radical lending options such as crowdfunding. Crowdfunding is a where people log into a site and donate money. Since it is public, friends and family could be solicited and can donate as much or as little to the business.

When it comes to financing a franchise, there are a lot of options available to the aspiring entrepreneur. With a business model already in place and the strength of an established brand backing you, the only limit is your determination.

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