Why doesnt the SBA include franchise territories in their loans and how am I supposed to finance the territory
Why doesnt the SBA include franchise territories in their loans and how am I supposed to finance the territory
Now you need to look at other financing sources. Sure, you can always turn to unconventional ways of financing a franchise territory such as turning to your home equity. But do you want to go down that road. We touched base on this in another article when we mentioned that you wouldn't hire a plumber to do the electrical in your house, so why use your home equity to finance a business!
So, where do you turn now? Well, perhaps you or your spouse has a retirement fund. If you have retirement funds of 50K or more, there are retirement rollover programs now that don't have any penalties or taxes involved when you are using any of those retirement funds to get your new business going. This is probably your best bet to purchase your territory because then your not carrying the liability of a loan. Rolling retirement funds to start-up or purchase a business is a newer concept to almost everyone, especially when there are no penalties or taxes involved.
We always thought that retirement funds could not be touched until we were of retirement age but even if we could touch them, we would draw on that fund usually carrying penalties. However, these newer IRS approved programs help you establish a corporation for your business and your new corporation will then establish it's own retirement plan. Then you can roll your existing retirement funds into your new corporations retirement plan. The retirement plan then purchases stock in your corporation. Basically, you're investing your own money into your own business rather than someone else's. Meanwhile, some of the funds can be utilized to purchase a business, whether it be for a territory or other franchise fees, a loan down payment or to purchase the entire business! This only applies if you are either leaving your present employment or if any of the funds are from a previous employer. Feel free to visit www.theslevingroup.com or email michele@theslevingroup.com to learn more.
Why doesnt the SBA include franchise territories in their loans and how am I supposed to finance the territory - To learn more about this author, visit Michele Slevin's Website.
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Financing a franchise may be easy, but financing a franchise territory may not. Franchise territories can range from 20K to 250K. All start-up costs of a franchise are covered by franchise loans such as the loan programs SBA lenders provide. However, the SBA does not include territory fees in their loans because lenders feel it is too risky to take on. Your ability to pay back that type of loan relies on your success in obtaining franchisees to start-up within your territory, because that's how you will make money. Suppose you purchase a territory and you don't sign on a franchisee for a year! SBA lenders don't want that risk!
Now you need to look at other financing sources. Sure, you can always turn to unconventional ways of financing a franchise territory such as turning to your home equity. But do you want to go down that road. We touched base on this in another article when we mentioned that you wouldn't hire a plumber to do the electrical in your house, so why use your home equity to finance a business!
So, where do you turn now? Well, perhaps you or your spouse has a retirement fund. If you have retirement funds of 50K or more, there are retirement rollover programs now that don't have any penalties or taxes involved when you are using any of those retirement funds to get your new business going. This is probably your best bet to purchase your territory because then your not carrying the liability of a loan. Rolling retirement funds to start-up or purchase a business is a newer concept to almost everyone, especially when there are no penalties or taxes involved.
We always thought that retirement funds could not be touched until we were of retirement age but even if we could touch them, we would draw on that fund usually carrying penalties. However, these newer IRS approved programs help you establish a corporation for your business and your new corporation will then establish it's own retirement plan. Then you can roll your existing retirement funds into your new corporations retirement plan. The retirement plan then purchases stock in your corporation. Basically, you're investing your own money into your own business rather than someone else's. Meanwhile, some of the funds can be utilized to purchase a business, whether it be for a territory or other franchise fees, a loan down payment or to purchase the entire business! This only applies if you are either leaving your present employment or if any of the funds are from a previous employer. Feel free to visit www.theslevingroup.com or email michele@theslevingroup.com to learn more.
Why doesnt the SBA include franchise territories in their loans and how am I supposed to finance the territory - To learn more about this author, visit Michele Slevin's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 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. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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