Franchise funding is an important topic to think about even before you thing about which franchise to buy. However, don’t get too far into the weeds about it, as many franchisors will work with you on the funding if you meet all the other criteria.
So what are some of the things that make franchise funding a little easier? First, know that there are franchises in almost every price range. If you are not going to have inventory and a retail space or a food franchise, you can often get started for between $50,000 and $100,000. There are even a few franchises that cost less.
Franchise Funding is best left to the experts. Even if you have cash, it might make sense to look at ways to maximize the money you have to get the best opportunity for growth, Here are a few ways that you can fund your franchise. But if you are really interested, give me a call and I can connect you with experts in the field.
- Cash- I know, sounds simple, right? You might have money saved, or recently received an inheritance and can get started right away. You can also use that cash to leverage more money. Some franchisors and lenders will loan you money if you can put a certain down payment.
- Retirement Funds- If you have retirement funds (a 401k or IRA for instance) and taxes have not yet been paid on the funds, you can use them towards the investment of a business. TThe benefits of 401(k) funding are:*Tax-deferred and penalty-free
*Not a traditional loan – does not have a required payback schedule
*Start your business with more equity from day one
*Funds can be used for operational expenses such as inventory, equipment and salaries
- SBA Loans- The Small Business Administration doesn’t actually make loans, but it does help back loans to help small businesses get started. You may need to put up some money to show you have “skin in the game”
- Small Business Loans without Collateral- These are all about your credit score. But whether your score is good or bad, you need to borrow the money the right way in order to think about your long term opportunities with your business.
- The franchisor-some franchisors have funding programs. They look for a down payment, good credit score, then will help you get financing through their inhouse lending.
- Franchise Managing partner programs- There are a few franchises that actually will partner with you or provide a base income so that you make enough money to cover your bills, which means you need less money to get started. In some cases you have to split the profits, but for some people that is the security they need to leave corporate.
Want to know more? Just fill our the form and Contact me.