After you’ve finally made the decision to take the plunge into franchising, the last thing you want to worry about is how you’re going to get the funding to help it thrive. Money is a tough issue for a lot of us, but it doesn’t have to completely stop anyone from pursuing their dreams. Fortunately, there are a lot of franchise financing options available to anyone willing to dig a little deeper and find a conventional franchise option that’s right for them.
We know most potential franchisees are fiscally cautious—and we get it. Your franchisor wants you to succeed as much as you do, so they will be there to help during initial financing. In many cases, a franchisor will be able to offer you franchise financing options for all of your costs including the franchise fees, equipment, and marketing resources. Some franchises, including 1Heart Franchise, will connect you with financing companies they have agreements with so you can get approved for your conventional franchise more easily, streamlining the loan process by leaps and bounds.
A conventional loan is a loan from a bank that can be used for a variety of things. When deciding how to finance a franchise, many people choose this route as it can seem the most straightforward. However, you will need a good credit score, a solid business plan, and collateral, all of which the bank will take into consideration before offering you a loan. If you have a good amount of equity or value in your house—and you’re willing to go the distance for your conventional franchise–you could also consider a home equity loan if you’re willing to take the risk of using your own home as collateral.
Small Business Administration (SBA) Loan
SBA loans are very similar to conventional loans from a bank. They are backed by the Small Business Administration and are a very common option for people navigating how to finance a franchise. The main difference between SBA and conventional loans is that a portion of the loan is guaranteed to be paid back to the lender. With that safety net in place, lenders are often willing to reduce interest rates on your conventional franchise and offer longer loan terms. You’ll need a good credit score and solid financial standing to be approved.
If your credit score isn’t as great as you’d like or you have a loan but it doesn’t quite cover all of your expenses, you can always get a little more creative:
- Get loans from family or friends
- Create a C corporation through your retirement fund to buy stock in your new business
- Lease business equipment to relieve upfront costs
If you’re still worried about how to finance a franchise, we can set your mind at ease. 1Heart Franchise wants to work with people looking to help seniors live comfortable and fulfilling lives, no matter what their conventional franchise experience or monetary situation may look like. We have an incredible support system and relatively low start-up costs compared to other retail franchises, as well as a caring staff that’s dedicated to your success. Get started today and we will connect you with a trusted lending company. If other financing options have gotten you nowhere, trust the experts at 1Heart Franchise today.