Starting a franchise can be immensely rewarding, but like most business ventures, getting off the ground will require funding. If you’re interested in learning how to finance a franchise, keep reading for several tips.
Tip 1: Ask the Franchisor for Funding
Many franchisors offer funding to help franchisees get started. Franchisors usually will not provide 100 percent of the necessary funding, but they often provide a hefty chunk of it: between 15 and 75 percent. To find out of this is an option, ask your franchisor if you can speak to one of their financing professionals.
Tip 2: Utilize Your Network
Your network can be another resource for drumming up franchise financing. Ask the people you know if they can point you toward potentially amenable investors. If you don’t have a network yet, look for events and local organizations in your area that can help you start building one.
Tip 3: Utilize Franchise-Supporting Organizations
Many organizations across the country provide support to franchisees. For instance, VetFran works with both franchisees and franchisors to make it easier for veterans to obtain franchise ownership.
Tip 4: Look into SBA Loans
Business loans can be used to open a franchise, but new entrepreneurs may have trouble securing them. To make it easier, the Small Business Administration (SBA) backs certain loans from approved lenders, making funding more accessible. As pointed out on Entrepreneur.com, this avenue is most open to would-be business owners with strong credit scores.
Tip 5: Consider Alternative Lenders
Alternative lenders are an additional financing method. They are particularly strong options when time is of the essence and for borrowers who are having trouble obtaining money through traditional lenders.
Tip 6: Be Persistent
When it comes to financing, virtually every entrepreneur deals with rejection at some point. Keep in mind that rejection isn’t the end of the road, and continue to explore your options until you find the right match.
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