Owning or operating a franchise comes with a good deal more responsibilities than being a franchisee; in particular, the start-up costs are considerably more since you’ll have oversight of multiple business operations. Although in the long run, the work may be less due to individual oversight of the business, the beginning requires some serious upfront investment.
Therefore, financing a franchise deserves its own run-down of the lending opportunities that are capable of providing you with the necessary funds.
Federal Government SBA 7 Loans
This is the standard Small Business Administration business loan, and the amount available is up to $5 million with a max 25-year repayment term – which is plenty for most franchisor operations. It can be used for virtually anything related to your business, and the interest rates are quite palatable at 7% to 9.5%. As with most of these types of loans, your credit score will need to be solid, and you need to have been in business for a couple of years.
Lenders Outside of Government
Although there are many benefits to using federal money in financing a franchise, you may not meet some of the stricter requirements. It is for this that outside lenders exist since the application process isn’t as stringent. You can secure short-term and long-term loan opportunities; however, the short-term loans do not rise much above several hundred thousand, which would only be enough for equipment, inventory, etc – not for operating your franchise in full.
One of the more robust options for financing a franchise is Funding Circle, which averages loans of $25,000 to $500,000 over five months to 6 years. CAN Capital is also in the mix with loans of between $2,500 and $250,000, with loan terms not exceeding about four years.
You can also try Apple Pie Capital – it is touted as a superior option for franchise financing because it focuses exclusively on this type. They finance remodels, acquisitions, new units and even provide equipment loans separately. The options are definitely out there for you to start your dream of opening a franchise; hopefully, this gets you off on the right foot.
Contact Rexford Commercial Capitalto get the financing you need for your franchise.
By Rexford Commercial Capital