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Facts About Franchise Loans for Businesses

facts about franchise loans for businesses

Franchises provide excellent career ventures for first-time entrepreneurs because they offer a safer and more reliable investment than starting your own business. Franchises provide business owners with an established business plan that has a proven record of success, resulting in an investment that offers lower startup costs and fewer financial risks. Nonetheless, new franchises still require ample funding to successfully launch, and it’s important to know your financing options in advance, so you can ensure the success of your business.

 

Internal Financing

Most franchises are willing to offer internal financing, so they can watch their brand name grow. They may be willing to defer a portion of the initial investment costs that can be paid back later, once the franchise begins to take off. Interest rates tend to be higher in these scenarios, but often times, no collateral is needed to secure the deal. Also, franchises can often establish leasing arrangements for you, as well as provide much of the equipment needed, enabling you to cut startup costs considerably.

 

Commercial Bank Loans

Commercial banks provide franchise loans for businesses that are a reliable option for covering hefty startup costs. Bankers are more willing to provide loans for established franchises with proven records of financial success, so buying a larger franchise will make it easier to obtain funding. In order to be eligible, good credit is imperative. You will also be required to provide collateral in the form of a down payment, often up to 20 percent of the loan amount. For first-time business owners, commercial bank loans can be difficult to secure. You may need to establish good business credit prior to applying for the loan.

 

Government Business Loans

For those unable to qualify for commercial bank loans, the U.S. Government provides loans with fewer restrictions. The US Small Business Administration (SBA) is the primary source of government-supported business funding. Since their loans are partially government-backed, the SBA is willing to take bigger risks on small businesses. This makes them ideal for first-time entrepreneurs or new businesses that have yet to establish good credit.

 

Online Business Loans

Online small business loans are a convenient and reliable way of obtaining needed funds for franchises. They often contain fewer eligibility requirements than other loan options and can get you the money within a couple of days. These loans are typically for smaller amounts and aren’t likely to cover the bulk of startup costs. They are a reliable option for first-time business owners who have yet to establish good business credit, and they offer flexibility with spending, so you have fewer restrictions on how the loan can be spent.

Operating a franchise is a great investment for new business owners or those seeking an investment with lower startup costs and risks. Since the business has already established a brand name and clientele basis, it entails less work on behalf of the business owner to market and promote the store. Nonetheless, any new business will require regular funding to thrive in the industry, and the more options you have at your disposal, the more successful you will be. Take your business career to the next level – apply for Credibly small business financing today!