Funding Your Franchise

Guest post by: Anne Barr
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Transfers vs. New First Time Franchisees - By Anne Barr

So you’ve found the perfect franchise. How do you pay for it?

You will need enough money to pay for the franchise fee, start up costs, and at least six months of your living expenses.

Obviously, the fastest and easiest option is to pay with cash.

If you are like the majority of franchise buyers, you either do not have enough money or you don’t have enough money that you are willing to risk on this business venture. So you are going to need some sort of financial assistance. There are a couple of options. If you own your home and have a good amount of equity, you can get a home equity loan to help fund your franchise. This is usually a fairly simple and straight forward process. If that’s not an option, there are ways to use your 401K to fund your franchise endeavor without penalties. This is also a pretty simple process if you know what you are doing. Luckily, there are several companies that will walk you through the entire process.

If none of those options work, you can always apply for an SBA loan. In today’s credit market, it is not easy to get an SBA loan. Banks are requiring at least 25% down, excellent credit scores (700+) with no bankruptcies, collateral, and experience. If you go this route, be prepared for a long and tedious process. The bank is going to closely scrutinize the franchise system you are purchasing. If the franchise has good brand recognition and a good success rate, the likelihood of being approved for an SBA loan greatly increases!

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Transfers vs. New First Time Franchisees - By Anne Barr

About the Author: Anne Barr

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Anne Barr has over 32 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company.
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