A look at the best ways to get financing for a franchise
Buying a franchise is a great option for new entrepreneurs. They get the guidance of an experienced team which greatly increases their chances for success. Starting a franchise is usually not cheap and there’s a strong chance that you’ll need to get financing if you want to join one, however. Thankfully, there are tonnes of ways that you can finance a franchise. All these options have their pros and cons, and some might be more accessible than others to you. Let’s look at a few different ways that you could finance your franchise.
One thing you should know is that a large portion of franchisors will have their in-house financing service. They will usually partner with a third party and will often be able to offer better rates than other lending institutions. They will often also offer better terms than banks because they are personally invested in your success. Some financing agreements will allow for deferred payments at the beginning and repayments on a sliding scale. You should also know that most franchisors that offer in-house financing will give you money for more than franchise fees. They might also cover other start-up fees like equipment purchases, for instance.
If you’re looking for a franchise that offers this kind of deal, you can check out franchise opportunities at Franchise Local. They have one of the largest directories of franchises in the country with over 400 different franchises. You’ll be able to see instantly which franchises offer financing and some of the other perks they offer to franchisees.
Commercial bank loan
Another option would be to get a traditional bank loan. Banks usually don’t like lending money to new businesses with no revenue, but they will often be more open to supporting franchise purchases. This is because they know that the concept is proven and will also judge the health of the franchise when looking at applications. If you want to get a bank loan, however, you have to make sure that your personal credit is in order. You might also have to give some things up as collateral, so be prepared for that.
You should also know that there are tonnes of grants available to people who want to start their business in the country. These grants often will not need to be repaid or will have much better terms than traditional loans. One of the most important things when applying for grants is to have a sound business plan. You also have to make sure that your paperwork is in order and not rush through the process.
There are over 35 Local Enterprise Partnerships programs around the country right now which focus mainly on helping small businesses succeed. If you want to see some of the grant opportunities available, you can check out https://www.lepnetwork.net/. You can also check out gov.uk and see if you can apply for a grant either through the UK Government, the Northern Ireland and Welsh Assemblies, or the Scottish Parliament.
These are all great ways to finance a franchise. See which option would be the best for you and what will be expected of you to qualify.