Biz2Credit helps you get franchise loans with one application through our network of funding sources
Finance Your Dream Franchise Loan through Biz2Credit's Platform
If you've always wanted to start your own business but have been afraid of the financial risk involved, opening a franchise might be the perfect solution for you. With a franchise, you get all of the independence, responsibility, and potential profit associated with owning your own business. Unlike starting a business from scratch, a franchise comes with a proven business model and a well-known brand, reducing your risk of failure dramatically. Lenders are well aware of the benefits associated with opening and operating a franchise and are more willing to approve franchise loans than a standard small business loan for a start-up.
Franchise business loans typically come with more attractive terms than you are likely to find for any other type of start-up business loan. This is because lenders consider the financial stability, business model, and previous success of the franchise parent company when reviewing a loan application. Banks and alternative lenders are finding franchises to be an increasingly attractive investment. In 2011, the SBA reported approval of $1.5 billion in 7(a) loans for franchises, up from approximately $826 million the previous fiscal year. The 7(a) loan-guarantee program is the SBA's most popular loan program.
Despite the relatively easier access to capital that a franchise owner enjoys, there are many different elements to think about before purchasing a franchise. Each franchise is operated differently and will come with its own set of operating and start-up costs. When considering pursuing franchise business financing, here are a few things for you to think about:
The Franchise To-Do List
- Make a list of the 10 fastest growing franchises in the country.
- Keep up with franchise news.
- Check the minimum amount of capital required to open a franchise. As with any new business, you'll need money for advertising, retail displays, signage, and even your first purchase of inventory. Some franchises offer initial investment help and payment plans. Did you know that Taco Bell is one of most expensive franchises to set up?
- Research the required operational process flow. For example, Quiznos requires 3 people to be involved in preparing a sandwich while Subway requires only one person. That's two additional salaries!
- Research royalty fees charged by the franchise management and the advertising and marketing support they provide.
- Research financial rankings of franchise networks. Banks rank franchises from grade A to D. The A higher grade usually means a lower down payment, less paperwork, and a quicker closing under SBA loan programs.
Biz2Credit can help entrepreneurs secure franchise business financing through its network of hundreds of lenders willing to grant loans. We have helped secure franchise loans for the owners of Dunkin' Donuts, Johnny Rockets, Subway, and other successful franchisees. Veterans, which are increasingly becoming franchisees, can refer to Biz2Credit's page on franchise loans for veterans.