Beyond Origins the Discussion

10 Places To Look For Franchise Financing

May 16th, 2008

You have stumbled upon a franchising proposal that you think is best suited for you. You have thoroughly read and understood all aspects of the trade, the capital needed and the risks involved with it. Now comes the big question of getting the money. To help, here are 10 places you can look for to get the capital. Remember, most successful businesses start on borrowed money and it is no shame if yours too opts for the same way.

1. Start with your own savings: If you have been earning and saving for long, then dip into your funds before you start to look anywhere else. Balance your liabilities and assets and see how much liquid money you can provide. But never cast your eyes over your retirement fund or children’s education funds; always keep something as a safeguard!
2. Ask for help from friends and family: Most of the times, we hate to do that fearing rejection and broken relationship. But, if you promise to repay with interest within a certain period of time and give everything in writing, friends and families can be of great help!
3. Take a second mortgage loan: Your house can be a good source of income. Take a loan keeping the house as collateral; but be sure of your success, otherwise you will loose your house!
4. Take a partner: If you are short of liquid cash, you can take a partner to share the burden of the start-up. Again, make sure that everything is on paper and consult good lawyers before finalizing anything.
5. Taking a bank loan: Banks are notoriously conservative when it comes to giving loans. But, if all your papers are in order and your credit history is good, then getting a loan will be easy. Try to get the loan through Small Business Administration; if it endorses and passes your project, any bank will give the loan. The brandEXPANSION Team can help get your financial paperwork in order.
6. Go to commercial banks: These banks are better because they are in the market for loans and business related issues. Even if they don’t give the loan personally, they will introduce you to private lenders.
7. Go for loans from self-directed IRA’s: It is possible to get loans from your retirement funds; check with services like Guidant Financial Services for details.
8. Get a co-signed loan: If a bank or your franchisor can co-sign the loan paper assuring that it will be by your side if you fail to return the money.
9. Look for angel investors and venture capitalists: With the IT sector cooling a bit, these people are looking to invest in other profitable businesses and yours might attract them if packaged well!
10. Go to lending institutes: The interest rate is high here, but if you are sure of your success, you can try them as well. But the flip side is there are generally fewer big loans options for small- or medium- sized businesses.

Entry Filed under: Finance