Financing Your Franchise Business
We’ve all seen the news, heard the radio ads, and have been bombarded by the online ads – “credit is back”! We’ve heard that lenders are lending again, purse straps are starting to loosen and our economy is moving. However, it seems people are still trying to find this so-called “money” the media speaks of. It’s there, but where? If you’re looking to purchase a franchise you probably feel a bit like Jerry Maguire yelling into your phone “Show me the money!”. This can leave you wondering where to go.
Well first, let me preface this by saying I am NOT in the financial industry; I am not an expert in this field – by any means; and that my experience stems simply from doing what I do over the past four years. Now that I’ve gotten that out of the way, I’ll give my unsolicited opinion.
Lenders are coming out of the dark, they’re excitedly seeking opportunities to finance and be part of something greater. However, they are still hesitant. If anyone got their hand smacked with a ruler during the recent crash, it was them! Because of this, their requirements are much stiffer than they used to be. Before, you could walk in with a 2-page business plan, a smile, and a dream and they would finance your business. What I have witnessed recently is that you must have a thorough business plan with projections, a bank account with a minimum of $20,000, and a credit score of at least 700. In a recent post, I discussed the importance of having these documents completed, doing so will aid in financial approval.
Again, these are much tougher regulations than they used to be, but don’t dismay, there are options. For instance, the Small Business Association (SBA) has a special “fast track” program for those seeking funding for a franchise operation. If a franchisor is an approved SBA franchisor, candidates will have an easier path towards financing. However, government-run programs are not your only option. There are companies, such as BoeFly, who work directly with lenders. BoeFly, who touts themselves as the Lending Tree for business financing, has a network of over 3,600 lenders vying for the opportunity to work with small business owners and franchisees looking to grow their business or add new locations.
No matter what route you take, one thing remains true – the funding is there. Working with a solid brand who has a sound business plan will make the financing side of your process much easier. Also, having a Franchise Development Specialist who can walk you through getting finance ready and will work with these lenders will make what can sometimes feel like a painful experiment, a little easier and a lot less painful.