Franchise Funding for Emerging Business Owners
For those who are new to business ownership, opening a franchise can be a smart way to get started. Owning a business with a well-known and respected name can make such a big move less daunting, and franchisors can provide helpful guidance along the way. But one key element of business ownership that you must be prepared to handle is the matter of obtaining franchise funding.
If you have never owned a business before, the concept of a business plan may be new to you. A carefully conceived and clearly documented business plan will help guide your business for years to come. It will also be scrutinized closely by potential lenders who can approve you for necessary financing, so it is well worth taking the time to create a plan that accurately reflects your business strategy, target market and expected income and expenses. Doing this research upfront will reap long term benefits for you and your business.
Franchise funding can be obtained from a range of different lending sources. You may be able to finance part of your business through a home equity loan or line of credit, or by taking a withdrawal from your retirement account. Perhaps you can recruit a business partner or investor who may not want to be involved in the day-to-day operations but who is willing to invest in your business and has the capital to do so.
However, it may be more likely that you will need to work with a financial institution in order to obtain funding. Commercial banks are one potential source you may consider. Not only will they want to examine your business plan, they will require personal financial statements and tax returns in order to assess your creditworthiness. As a new business owner, this route may be especially difficult.
Instead, you may want to look into lending programs through the Small Business Administration (SBA) for franchise funding, which works with banks to offer loans guaranteed by the federal government. In particular, franchises on the SBA Franchise Registry can get loans approved even more quickly since the franchise agreement has been pre-approved. The International Franchise Association (IFA) offers programs for veterans, women and minorities, which could be another route to financing.
New business owners who have decided to open a franchise are no doubt overwhelmed with tasks to accomplish. For the best shot at a successful launch and years of profitability down the road, it is worth devoting the time upfront to documenting your business strategy in a detailed plan and using it to obtain essential franchise funding for your business.