Drive Franchise Business Growth
Owning your own franchise is a great option to start your own business, but the franchisors often require franchisees to have significant amounts of liquid cash to qualify for the franchise. This means you need to maximize what you can finance, so you can keep as much liquid cash as possible to qualify and start the business.
You will need to have capital (combination of down payment, financing, and liquid cash for operations) to cover the upfront franchise fee, equipment, real estate, and working capital that franchisors require.
We can help existing franchisees with:
- Refinancing of existing debt
- Purchase of an existing store(s) from another franchisee
- Restructuring of Ownership – buyout of other owner(s)
We can provide new and existing franchisees with access to competitive rates and fast approvals for:
- SBA Loans
- Business acquisition financing
- Equipment financing
- Commercial real estate financing
Best Sources for Franchise Financing
The Franchisor
The best source, at least for larger franchises, is probably your franchisor. Many franchisors offer financing options to help existing and potential franchisees start or expand their business. The loan types, rates, and down payments vary widely among franchisors. Franchisors will ask you to show that you have the experience and capital to show you are a good franchise candidate, so be ready to prove it.
SBA Loans
SBA Loans are also a good option for franchise financing. However, the SBA must have approved the franchise you are interested in and list it on their Franchise Directory, or it will not be eligible for an SBA loan. SBA loans offer some of the most affordable terms on the market for small business loans, so hopefully your franchise is on the SBA approved Franchise Directory.
The benefit of using an SBA Loan for your franchise:
- Larger loan amounts – SBA Loans can range in size depending on which program you seek funding through, but loans backed by the SBA can be as much as $2 million.
- Longer repayment terms – Repayment terms are typically 10 years, but some of the programs allow repayment terms of up to 25 years.
- Regulated interest rates – Any SBA-approved lender will have to adhere to SBA-dictated interest rates. As a result, SBA loans will come with interest rates in the single digits.
The downside of using an SBA loan for your franchise, due to government regulations and paperwork:
- Longer time to fund – Both the SBA and the lending bank or other lender that is relying on the SBA government guarantee in order to approve the loan.
- Harder to qualify – SBA loans are the best options for small business loans so they will be tough to qualify for. This is especially true for franchises that are just starting up. Many SBA lenders (banks and others) will want to see substantial business history for the franchiser as well as for the borrower.
How MultiSource Finance Can Help
If your Franchiser does not offer financing, the SBA has not yet approved your Franchisee for inclusion on the SBA Franchise Directory, or you can’t qualify for a conventional bank loan or the SBA financing programs, then talk with MultiSource Finance. We will be able to provide you with alternative lenders that can provide financing for:
- Business Acquisition
- Equipment
- Commercial Real Estate
- Working Capital
Contact us today for more information on your Franchise Financing options.
