Over the past several years, many people across the country have envisioned leaving their current work environment for the opportunity to own a business or franchise. In many ways that is the easiest decision to make but the work is just beginning.
In the past several years the opportunity to own a business and franchise has appeared around every corner and in nearly every industry. For many families the challenge is not decide whether to get into business but how they will finance the one that they want.
There are a number of financing options that exist and they all have pros and cons which need to be researched.
SBA Loans – Small Business Administration guarantees loans for banks and lenders and typically will have limitation on values. Total loan amounts under $100-150,000 may offer low or minimal documentation and a more efficient process.
401k/Retirement – These are specialty financing options. There are several organizations that focus on these programs to avoid penalties and taxes while accessing the values you have in your retirement plans.
Franchisors may also have financing options available. As the established company, with a history, many times they have relationships to support financing options.
Finally, personal assets – with the numerous programs available throughout the three categories mentioned above, it is necessary for you to plan on raising 20-30% of the capital yourself. All of the lending institutions want to be able to know that they are partnering with you, as much as you are partnering with them.
The process of securing financing can be long and tedious. Be patient, diligent, and do not lose focus on your defined goal of opening and operating your own business for you and your family.
How to Finance Your Franchise - To learn more about this author, visit Tom Parsley's Website.
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