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Take It To The Bank

Guest post by: Anne Barr

Article Overview: This article gives a summary of what it takes for a potential franchisee to qualify for a loan to fund their franchise start up.

Take It To The Bank

How do potential franchisees qualify for a loan?

• Have a good credit score - 700 or better with no bankruptcies, no large credit card debt or defaults on mortgages or other loans.

• Cash injection ability of 30-50% of turn-key cost using non-borrowed funds.

• Have a minimum of six months living expenses in reserve (bank or savings) or a working spouse whose income covers your living expenses.

• Be joining a brand in which the franchisees (on average) earn enough to cover your expenses (after ramping up to cash flow positive).

• Have tangible net worth enough to cover working capital needs for 12-15 months. (This would include all of your assets - even the real equity in your house).

• Tax returns and credit reports match up to your resume.

• Have a detailed business plan with 1-3 years projections.

In the event you feel you have an "in" at a local or community bank, whether a referral from family or friend or networking partner, go visit the banker in person and be prepared! Dress well and prepare professional-looking materials. Bound presentations that include industry data, profit and loss projections for the first three years, information about competitors in your area and demographics/market data will be impressive and show the lender you've done your homework. Have a cover sheet with details such as loan amount you are seeking, your cash injection, what the money will be used for, terms you want (length of loan, interest rate, no prepayment penalty) and brief info about the franchise brand. Always include your personal financial statement and a credit report. Find a lender that understands the franchise industry!

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Article Tags: franchise financing, funding a business venture



Related Forum Posts
You can see my Bank statement......... - Hi there, Today we are bombarded with 'Business Opportunities' by the multitude. I believe it is possible to earn a lot through the internet, but it is hard work. Nobody gets it very easy on a long term basis. [b][b]How much notice do people take[/b], [/b]when the Bank Statements are shown as means of 'how credible' their business idea is? Are they always totally true? They look authentic. The whole industry is growing rapidly. What is your experience? Is there any regulation in presenting the 'Bank Statement' or other statements from 'Click Bank' etc ? Kindest Regards Beat "Unlock People's Potentials!"
BDC - [quote="IWDCanada":jib6tqt9]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:jib6tqt9] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.
Re: BDC - [quote="Jones":255lkmrn][quote="IWDCanada":255lkmrn]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:255lkmrn] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.[/quote:255lkmrn] I'll be working with the BDC later this month on a few projects. From what i've been told they are really great when it comes to small business. Their loans have a little higher interest but their payment terms are a lot easier to swallow. I can give you a contact if you need.
Re: Interrealtionship between financial statements - Hi there, It is not necessary to post each transaction in all of the separate financial statements. In any given transaction, you will post an equal amount of debits and credits to the associated accounts. An example would be if you were to write a check for $500 to office depot for office supplies. The posted transaction would be: DEBIT Office Supplies $500.00 CREDIT Bank Account $500.00 Once the transaction is posted, it will automatically show up on the appropriate financial statement report. In the above example, you would find the Bank Account transaction on the balance sheet and the office supplies transaction on the profit and loss statement. I hope this is clear! Please let me know if you have any other bookkeeping questions. I would be happy to help, Stephanie Horne
Re: Character Design - using it effectively in marketing - Hmmm... I wonder if that's what Royal Bank of Canada is doing with the animated character of the man in a bowler hat?


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