The ROBS option allows you to use funds from your retirement savings to finance your franchise without paying early withdrawal penalties and taxes. This can be an attractive option for franchisees that struggle to get traditional loans and are comfortable with some amount of risk. Those with substantial retirement savings may feel most sanguine removing a portion of those funds for this purpose.
Some franchising companies run their own franchise financing programs that help franchisees get in the door. Program offerings and requirements vary by franchisor, with such options as limited-term loans, reduced license fees or reduced royalties, and minority stake ownership by franchisors. Some companies, like Ace Hardware, offer financing to existing franchisees to open a new store or buy out a competitor.
Some franchising companies run their own franchise financing programs that help franchisees get in the door. Program offerings and requirements vary by franchisor, with such options as limited-term loans, reduced license fees or reduced royalties, and minority stake ownership by franchisors. Some companies, like Ace Hardware, offer financing to existing franchisees to open a new store or buy out a competitor.
Alternative lenders: Once you have your franchise up and running, you’ll need funding to work through seasonal ups and downs, purchase new equipment and possibly open another location. If you’re still having a hard time finding traditional funding, alternative lenders may help fill the gap. They tend to be quicker than traditional loan providers — some even fund within a day — and have looser qualification standards. However, annual percentage rates for alternative lenders typically are higher, so make sure you review your total cost of borrowing before deciding on a loan.
Mid Prime franchise loans are a great tool for small business owners who are unable to get bank rate working capital, but don’t want to pay exorbitant rates that a small business owner would get from a business cash advance. Alternative loans are private, non-bank loans and have much fewer credit and documentation requirements than a bank would require. Additionally, an alternative loan will fund within days, as opposed to months.
The MBDA does not directly loan money, but it does provide resources for members of minority groups who are trying to start a business. They have business centers around the country where entrepreneurs can seek mentorship and guidance as they start their business. These business centers are located in areas with a high amount of minority-owned businesses. You can go to MBDA.gov/businesscenters to find one in your area where you will be advised on everything from writing a business plan so you can apply for funding to marketing your business.
If you do have people in your life who could invest in your business, getting a loan from friends and family is sometimes an option. Of course, for many entrepreneurs who are just starting out and in need of cash, this just isn’t a possibility. Either the amount they need is too high, or their circle of friends and family is small or possibly strapped for money themselves. It’s possible that your friends and family will think it’s too risky because of your bad credit as well.

Having liquid assets, valuable collateral and a good credit rating will go a long way to helping you get a franchise loan. According to The Wall Street Journal, most banks will be looking for around one-fifth or 20% of franchise startup costs to come from the owner before considering lending options, and without a good credit score, most lenders won't feel comfortable extending a loan even if the proposed franchise is known for long-standing success.
Spend the next week working on your pitch, your business plan, and on researching your financing options. Remember that your business plan isn’t set in stone. It should remain a “live” document as you progress and as you grow. Don’t stress about it, just use this week to focus your thoughts and bring everything you thought about and learned in week one together.
One basic way to protect proprietary company information is through the use of a Confidentiality and Invention Assignment Agreement. This type of agreement deals with confidentiality issues, but can also ensure that the ideas, work product, and inventions the employee creates that are related to company business belong to the company—not the employee.
Small business line of credit. Under a small business line of credit, your business can access funds from the lender as needed. There will be a cap on the amount of funds accessible (e.g., $100,000) but a line of credit is useful for managing a company’s cash flow and unexpected expenses. There will typically be a fee for setting up the line of credit, but you don’t get charged interest until you actually draw down the funds. Interest is typically paid monthly and the principal drawn down on the line is often amortized over years. However, most lines of credit require renewal annually, which may require an additional fee. If the line is not renewed, you will be required to pay it in full at that time.
Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and, co-author of Poker for Dummies and Mergers and Acquisitions of Privately Held Companies (Bloomberg), and a Wall Street Journal-bestselling book on small business. He was also a corporate and M&A partner at the law firm of Orrick, Herrington & Sutcliffe, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.
As you have done throughout the planning and startup process, consider analyzing your competitors and other companies. How are they selling themselves? How do they portray themselves? What do they say makes them unique? If you’re not sure, take a look at their advertising and marketing messages. This is generally where you’ll find the USP or variations of it.
Bank loans are a great option, but before you go that route, make sure you’ve done your market research and can demonstrate that your business will do well in your area. If you haven’t had any luck getting loans from traditional lenders, look for a lender that offers SBA-backed loans, since they’re geared specifically to the needs of small businesses and are only open to those who can’t get funding elsewhere. Other financial options include online alternative lenders, which may be less restrictive in who they approve, but also tend to charge higher fees and rates.

I traveled across the U.S. and around the world, and kept meeting unconventional entrepreneurs -- people who had started a business almost unexpectedly, usually without a lot of planning and almost always without a lot of money. Most of them did so for $1,000 or less, and half of them did so for $100 or less. My goal was to tell their stories in a way that readers could use in their own quest for freedom.
Loans backed by the Small Business Administration (SBA) are a favorite of franchisees, since they tend to have higher limits and lower rates than commercial loans. However, SBA loans come with strict requirements, including the need to prove that you don’t have the ability to obtain a loan from traditional lenders. Partner institutions disburse and administer the loans with SBA approval and application requirements tend to be quite extensive.
There are many financing options for your franchise, but making the right choice is critical to your success. ApplePie understands the complexity and time constraints that you face in securing capital. That's why we’ve created a transformative lending network to suit your financial needs, maximizing flexibility and reducing the headaches and inefficiency of working separately across individual lenders.  
Broadly, there are two types of loans: secured and unsecured. There are dozens of types of loans depending on their nature, purpose, applicability, loan amount, interest and terms but they can all be classified as either secured or unsecured. Secured loans require collateral. It is a tangible asset that acts as the security. Unsecured loans don’t need such collateral or any security.

Lenders prefer financial statements that have been audited by a certified public accountant (CPA). But many small businesses don’t want to incur the costs of an audit, so one alternative is to have the financial statements “reviewed” by a CPA (which is cheaper and faster). However, some lenders may not require either audited or reviewed statements.

According to Meme Moy, a spokesperson for FRANData, about 2,000 franchises are currently on the Registry. When a franchise is on the Registry, lenders can see its historical loan performance. About 55 % of lenders only lend to franchises that are on the franchise registry, so this an important step in choosing a franchise. By choosing a franchise that is on the Registry, you can get better and faster access to SBA funding. To check if your franchise is on the Registry, click here.

Instagram is a social networking app that’s owned by Facebook. Instagram is available for free on Apple iOS, Android, and Windows Phone. The app enables you to upload and share photos and videos with your followers. A posted video or photo will be displayed on your profile where followers can view, like or make comments. Instagram has over 800 million monthly users which provide small businesses with a great opportunity to expand their customer base.
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Traditionally, the first place franchisees turn for financing is the franchisor. Almost all U.S. franchisors provide debt financing only. Some carry the entire loan or a fraction thereof through their own finance company. We found fractions of 15 percent, 20 percent and 25 percent, all the way up to 75 percent of the total debt burden. The franchisors we talked to emphasized that these figures are simply guidelines and not hard and fast limits.
Most lenders are interested in how long you've been at a certain job or lived in the same location, and whether you have a record of finishing what you start. If your past record doesn't show a history of stability, then be prepared with good explanations. Not only is the amount of income you earn important but so is your ability to live within that income. Some people earn $100,000 a year and still can't pay their debts, while others budget nicely on $20,000 a year.

Able Lending will manage and administer your process of raising 100% of your needed funds from friends and family. They make it easy for you to look professional, be charged your agreed upon interest rate with each individual investor, and they make sure everyone gets paid on time. They do all of this for a single origination fee of 1-3% at the time of funding.
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