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Take a moment to sit down and figure out what the financing needs of the franchising business will be. Work out an effective finance plan and decide on what you can invest personally and what component you will need to do get a business loan for. Gets a clear understanding of the commercial lending business. While you may be convinced about the success of your proposed business from a lenders point of view. Read the insights offered by the International Franchise Association, IFA.
To get a business loan approved you must:
• Create a comprehensive plan highlighting how much loan you need and what it will be used for. Be clear what the return to the business will be.
• Calculate fairly your net worth ask the bank to help you with this.
• Keep your credit rating and report handy. If you have a great credit history and rating then banks and lending institutions are more likely to sanction the loan applied for.
• In the business plan include a resume that highlights your qualifications, experience, an estimate of your income and expenses in the first year of operations and a detailed presentation of the franchise.
• Highlight clearly to lenders when you expect to make profits and why your franchise is bound to be a success. Include a marketing plan that is professionally presented.
• When applying identify sources of financing available to you personally. Sources to include are: family, partners, friends, mortgages on property owned, securities, insurance policies, and perhaps the franchisor.
• Find out about loans offered by US Small Business Administration to franchisees.
• Ask the franchisor whether they are offering any start up finance support. Many offer equipment leasing programs, waiver o fees, or in house relationships with financial institutions and banks.
• Find out if the franchisor extends any guarantees some even help by offering to work at the franchise to smoothen the process of running the set up. The fewer the hitches the lower the chances of money going waste.
• Be prepared to invest personally or offer collateral. Otherwise you will not get financing easily. More often than not no 100 percent financing is available.
• Study the interest rates on offer so that you do not land up with a loan at the highest rate of interest.
Finance for a franchising business can come from: franchise companies themselves, banks and other lending institutions, federal programs, financing programs run by the state, country, or city for purposes of job creation, microfinance, and more. Remember all financers ate focused on the three Cs : capital, capacity, collateral. You need to convince the lender that you are committed to be a success and are trustworthy. |
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Matthew Pawlina is a writer for Best Franchise, the premier website to find best franchises, Franchise For Sale, food franchise, franchise latest industry updates, top franchise, franchise opportunity, franchising service providers, franchise opportunities and many more. |
