Buying a participation in a franchise is almost a merger of the better aspects of two worlds: you get all the benefits that offer a small business operation, along with the support of an organized corporation. The trick to getting a franchise has to do with the numbers you handle on your end as well as your ability to place an investment.
While many established brands are being more open to accepting means of alternative financing you can always check with the brand you wish to approach right off the bat to see if they have a finance program that doesn’t require putting down an upfront payment.
Most likely even established brands will have a program set and running to get you covered, but they will also have complete control over you as you are expected to deliver certain milestones to pay them back.
A Business Loan: A Manageable Way to get financed
If you are looking to start off with the right foot on your franchise or if you have an business operation already up and running, working with alternative lending services might be the best course of action for you, unlike most of the other means that many consultants can recommend such as SBA loans, Lending agencies can grant the money you need in less time than it takes to deal with franchise financing or with banks.
If you need additional advantages to work your franchise with money from a lending agency we can dig a little more. Aside from having an automated process to handle their grants, most lending agencies work by principles of nearly zero tolerance for bureaucratic processes so the paperwork they’ll ask out of you will be minimal.
Things to Notice on Loan Agencies and their offers
While some alternative lenders or agencies offer their services sight-unseen and charging high interest rates, some other offer payment structures that are actually manageable for business owners or entrepreneurs. The agencies willing to do this do not work in the same way as a bank does, but they still need to make sure that you are able to pay them back and as such, they will ask for information regarding your financial status.
This is not a cause to worry though, most people applying to these usually get a grant. Most of the companies that have made public offerings to work with franchises offer loans starting at $10,000 to $350,000. Some of them are just willing to lend to operations that have been running for 2 years with no problems while others are ready to take more risks and finance startups business.
The Documents you need to get your Franchise Financed
Even if you are working with alternative lenders you need to gather a few documents to provide certain facts about your business operation and about yourself if the agency requires it. As you get your bearings together, make sure to get your personal credit history in order.
Unlike your business, which can reflect diverse results on performance that vary each passing month, your personal credit usually says volumes about you and how disciplined you are to handle money. If your plan is months away of being formalized you can use that gracing period to get your act together since most the times' lenders ask for your credit performance over the last 6 months.
A balance sheet can’t also hurt, even if they don’t ask for it. This document will let them know how much you are actually worth when it comes to your assets and debts. Income statements are also useful since it could give them reassurance on just how you are planning to use the money they are giving you.
Last but not least is a business plan. Again, this is another document that is not asked by most lenders out there, but that you surely will need to make your franchise run smoothly. The main issue with lending agencies at this point is the fact that there is no standardized approach to their business model.
Closing thoughts and considerations regarding Business Loans and Franchises
The issue that seems to be a constant on the end of these agencies is the fact that the ones that ask for less information are the ones that are willing to charge highest interest rates, if a lender is ready to do a quick check up on your finances, he’s most likely to offer a deal that is better suited to your needs.
Getting your franchise up and running has never been easier with so many people willing to dispense their capital to get secured returns, franchises are one of the biggest business opportunities in Australia and as such they will be getting a lot of attention over the next few years as more brands appear, and established ones diversify to compete in a market that is only open to experience growth and development.
