Franchise Financing Options to Consider

Franchise Financing Options to Consider

Buying into a franchise gives you the independence and flexibility of a small business owner, with the infrastructure and support of larger companies. If you are ready to become an entrepreneur, then franchising may be a smart option.

While this is a smart business move, it does require a significant upfront investment. Because of this, it may be time to get to know your franchise financing options. Keep reading to learn what some of the most popular options are.

Franchisor Financing

Before looking outside the franchise, speak to the franchisor about franchisor financing. Many businesses that operate as a franchise provide financing solutions for franchisees. This is done through established partnerships with specific lenders or by the corporation providing the capital needed.

This is one of the most common options of franchise financing used today.

One of the main benefits of this financing option is that you don’t have to go elsewhere and involve another party. Along with purchasing the franchise, the capital from a franchisor may also cover equipment and other resources required to get the business up and running.

Commercial Bank Loans

Another way to finance your franchise is with a traditional bank loan. Term loans are the most common funding option for financing a business venture, along with several other purchases.

A bank or alternate lender will provide you with a lump sum of capital upfront with this model. You then repay the loan and interest by making monthly installments for a specific amount of time.

If you choose this franchise financing option, be ready to provide a business plan and your personal credit history, which are both considered before granting the loan. The lender is going to use this information to determine if you are creditworthy.

SBA Loans

The most desirable financing product for any potential franchisees is an SBA loan. These are partially backed by the SBA and funded by lending partners.

The loans work similarly to traditional bank loans; however, the SBA reduces lender risk by guaranteeing a part of the initial loan amount. However, these loans are extremely competitive, so you must realize this and make sure it works with your needs.

Finding the Right Franchise Financing Option

As you can see, you have several options when it comes to franchise financing. Be sure to consider the options to find the one that best suits your needs. This is going to pay off and help you get the capital needed for your business venture. Charis Commercial Capital offers comprehensive franchise financing solutions for both new and existing operations. Contact our offices today to learn more.


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