“For many individuals, funding a business may involve taking on significant business or personal debt. With most loans, you would need to start making payments right away. This makes it difficult for your business to grow in its early stages, when you’re trying to build revenue and generate profits. With ROBS funding, you avoid having principal or interest payments, which can greatly impede your cash flow, especially in the early years of business. Using retirement funds can also help your business reach profitability faster. And because you’re investing your own money in your own business, there’s no need to provide collateral, like your personal home.”
Your answer will be something like the famous “elevator pitch”, or maybe a mission statement. It doesn’t matter whether it’s perfectly polished yet, but it is important that your answer is clear and easy to understand. If you were talking to your neighbours at a barbecue and they asked you what you do, would your answer make their eyes light up or glaze over? Would it make them ask for more details, or hurriedly excuse themselves to grab another burger?
Domonique is a Minnesota native that earned her bachelors from The University of Arizona with a degree in English and Film Studies. Though books and writing are not her only interest, you can find her engaging in nutritional sciences, environmentalism, vegan cuisine, filmmaking, old school dancing, tennis, running, sound engineering, and enjoying satirical dark comedies or listening to the poetic lyrics of Bob Dylan. She is now based in Los Angeles as a content writer for GUD Capital where she spends her spare time honing her writing and directing skills. 
In addition, the franchise industry is also experiencing a growth in companies dedicated to helping franchise owners secure financing. Two such firms are BoeFly (which matches borrowers to lenders online) and Franchise America Finance (who provides custom lending solutions for franchisees and works with franchisors such as The UPS Store, Popeyes, and Jersey Mike’s).
SmartBiz does not originate loans. Rather, it is a service that matches business owners with SBA-preferred banks. If you don’t qualify for an SBA loan, SmartBiz can match you with one of its non-SBA partners to secure a loan. While SBA loans have the lowest interest rates and longest repayment terms — up to 10 years for most loans — you might still be able to get a medium-term non-SBA loan with an interest rate as low as 7.99% through SmartBiz.

To find out the best ways for new business owners to secure loans, I consulted with experts who have a wide range of experience with funding businesses including Jared Hecht, CEO of the online lending website Fundera, David J. Hall from the Small Business Association, Hal Shelton who is a SCORE mentor and author of The Secrets to Writing a Successful Business Plan (Summit Valley Press 2014) and Larry Conley, Senior Vice President and Specialty Finance National Manager for Chase bank.
Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .
Direct online lenders. There are a number of online lenders that make small business loans through a relatively easy online process. Reputable companies such as Swift Capital provide very fast small business cash advances, working capital loans, and short-term loans in amounts from $5,000 to $500,000. Sites such as Fundera and LendingTree offer you access to multiple lenders, acting as a lead generation service for lenders.
Since there is no collateral for the SBA Express working capital loan, how do they determine who qualifies?  Credit is a primary factor when lending working capital without collateral.  Generally, you should have less than $15,000 in credit card debt, 10% of the loan amount as cash on hand and be able to show a 10% cash injection into your business.  Like a mortgage, these can not be borrowed funds, however gifts from family is usually acceptable.  Lastly, you need to show “comparable credit” comparable to the amount you wish to borrow.  Typically, anyone with a mortgage past or present would qualify.  Some exceptions are made for military veterans.
As with other small businesses, finding financing for a new franchise can be one of the biggest challenges owners face. Some financing options are unique to franchises, such as franchisor discounts on fees and online financing companies that cater to franchises. General business financing options such as traditional and Small Business Administration loans are also available to franchisees.

He is also a nationally recognized employee training expert, and was one of the first people to receive the Certified Professional in Learning and Performance certification from the Association for Talent Development. In 2015, Jeff was awarded the CPLP Contributor Award by ATD for his numerous contributions to the program. He is a past president of ATD's San Diego chapter, where he was a recipient of the WillaMae M. Heitman Award for distinguished service.

StreetShares (see our review) is a P2P lending service that brings together business owners and investors. StreetShares is especially geared toward veteran-owned businesses. Indeed, owning a franchise can be a good transition for veterans transitioning to civilian life. However, even if you’re not a veteran, you can still use this innovative loans marketplace to get an unsecured short-term business loan or line of credit of up to $100,000. You will need to have been in business a year, or in some cases only 6 months, in order to qualify.
Working capital loans. A working capital loan is a debt borrowing vehicle used by the company to finance its daily operations. Companies use such loans to manage fluctuations in revenues and expenses due to seasonality or other circumstances in their business. Some working capital loans are unsecured, but companies that have little or no credit history will have to pledge collateral for the loan or provide a personal guarantee. Working capital loans tend to be short-term loans of 30 days to 1 year. Such loans typically vary from $5,000 to $100,000 for small businesses.
This website contains information concerning the franchise businesses on our platform, including a franchise disclosure document, that are either provided by or based upon information obtained from third parties. We have not independently verified the accuracy or completeness of the information contained in the franchise disclosure documents or information obtained from third parties. We do not endorse or adopt this information, and we do not make representations as to the accuracy, completeness, suitability or validity of any information obtained from third parties and will not be liable for any errors or omissions in this information or any damages arising from its display or use.
The staff at Key Commercial Capital was wonderful. They made sure to explain all our options in detail and were always interested in the best for us. They verified our documents before submitting for approval to ensure everything was in order and that the application and closing process was as smooth as possible. They were also very responsive and available at all times. I will certainly be back on the next opportunity.
Traditional loan: Banks and credit unions are a source of financing for all businesses, including franchises. New franchise owners are 15% more likely than other new business owners to use a commercial bank loan, according to the SBA. Lenders are more likely to finance franchises of an established brand that has proved successful in a variety of markets. However, you’ll still be subjected to the bank’s underwriting standards and lending policies, meaning it will review your net worth and credit history. You also may need to put up collateral, regardless of the brand you’re associated with.

Some things we like about StreetShares include its excellent customer service, easy application, competitive rates, and speedy time-to-funding. You don’t even need to put up any business collateral for a StreetShares loan (though you will need a business guarantor who is willing to essentially “co-sign” your loan). Another thing that makes StreetShares special is that franchise owners who are also veterans and/or who have an interesting business backstory are preferred. See our StreetShares review to learn more about this alternative lending leader.


Starting any business has a price, so you need to determine how you're going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you're planning to leave your current job to focus on your business, do you have some money put away to support yourself until you start making a profit? Find out how much you're going to need.
No business lender is perfect. A lot of them try (and get pretty close) but sometimes, the biggest advantages can lead to polarizing disadvantages. Take OnDeck Capital, for instance. This online business lender is widely-praised by all kinds of small business owners, and rightfully so. OnDeck’s application requires minimal paperwork, you can get funded in […]
There are plenty of resources that business owners can refer to when putting together their loan applications. The Small Business Administration, for example, provides a highly detailed loan application checklist for borrowers. Using these resources can decrease your likelihood of coming across as disorganized or unprepared. [See Related Story: Applying for a Small Business Loan? Here's What You'll Need]
It’s natural to consider if these options are worth the possible bad effects down the road. Of course, for some business owners, not getting more financing as soon as possible could mean having to take drastic measures—even closing the business. The silver lining here is that most of the above will help recover your credit if you keep in good standing and make on time payments. There is a caveat: if you can’t make on time payments, these options will sink your business into debt and make matters worse.
A franchise merchant cash advance (MCA) is a short-term loan that provides capital to franchises that need funding quickly. Approval for a merchant cash advance can take a matter of minutes, and funding can be completed in as little as 24-48 hours. Merchant cash advances work by having a funding company purchase a portion of your franchise’s future receivables at a discount, with an upfront payment to the franchise. After funding the funding company will then collect repayment by splitting each days credit card batches with the franchise.
General purpose business loans. The most widely used SBA loans, SBA 7(a) general loans can greatly help if you’re investing in a franchise. Because SBA loans are guaranteed by the government, they’re easier to qualify for than traditional bank loans. The amount and rates that you can potentially qualify for may make them worth the extra time and documents needed to apply. Outside of the loan itself, the Small Business Administration offers free tools to help you plan for securing the loan and keep up on your new enterprise once you’ve become a franchisee.

Some franchisors report being approached by financial brokers--historically more interested in big deals--to put together large pools of money using SBA and private funds. These funds would be available to franchisees through the franchisors like a trust fund. Groups of smaller banks with funds to invest would contribute to the fund from all over the country.
Personal collateral requirements depend on the loan amount and the project. Does the coffee franchise involve commercial real estate or will the business be leasing a space? Collateral can be in different forms. Real estate equity is one form of collateral. Cash (in the form of a payment reserve or a CD) is another. We would need to know the specific project cost breakdown to know what might be possible. Rule of thumb would be to plan on 25% personal equity into the business and the bank will finance 75%. If it is preferred to avoid putting a lien on personal real estate, plan to have 18 months of loan payments to set aside in an escrow account at the bank as a payment reserve. The payment reserve can be released back to you after 2 years, as long as the business is showing good cash flow and making the loan payments without a problem. The other option is a CD held at the bank for the term of the loan. The CD is usually a smaller amount of funds than the payment reserve but is held for the entire term of the loan.
Ideally, your business will operate long enough and become successful enough that the company will get its own credit score and be able to qualify for a loan on its own. Building a business credit score requires your company to establish its own identity, including having its own tax ID number or employer ID number, obtained from the IRS. You'll typically also need a business credit card in the organization's name that's always paid on time.  

A franchise gives you the opportunity to have your own business with the safety net of a proven business model. However, the costs of starting and running a franchise can be substantial. The two best financing options to start your franchise are Rollovers for Business Startups and SBA loans. If you’re not sure where to begin you should reach out to your franchisor for help in the process because they should have experience with your specific franchise.
Real estate investment is a great business. However, the SBA will not guarantee loans for business that do what they consider speculation. Unfortunately, real estate investment is considered speculation. We may be able to get you a non SBA business line of credit up to 150K. If you are interested, please fill out our pre-qualification form and we will schedule a call to go over your options. https://keycommercialcapital.com/prequalify/
If you've always wanted to start your own business but have been afraid of the financial risk involved, opening a franchise might be the perfect solution for you. With a franchise, you get all of the independence, responsibility, and potential profit associated with owning your own business. Unlike starting a business from scratch, a franchise comes with a proven business model and a well-known brand, reducing your risk of failure dramatically. Lenders are well aware of the benefits associated with opening and operating a franchise and are more willing to approve franchise loans than a standard small business loan for a start-up.
In this article we’re going to discuss how you can finance the purchase of a new franchise. We’ll discuss where to find franchise financing and what you need to consider before jumping in. We’ll also give you some options to think about if you actually need working capital financing for your existing franchise. Before we dive in, let’s take a quick look at your two best options for franchise financing.
We’ve touched on a lot of different topics, of course, and I’ve linked to more tutorials so that you can dig into the details in each area. I’d encourage you to read some of those tutorials to go deeper into the key subjects, and to subscribe to our newsletter (there’s a form down in the footer) to stay up to date with the latest business tutorials published here. We've got plenty more on the way!
A lockbox advance is a high risk merchant cash advance using a credit card split, but the way its split is different than a conventional MCA advance. When a lockbox is involved, all deposits are put into a new bank account setup by the funder, where the funder will then collect its share of the daily batches, and then release to the merchant. The process is a bit slower, taking up to 24 hours for the money to hit the merchant’s account.
Confidentiality Agreements. These are also referred to as Non-Disclosure Agreements or NDAs. The purpose of the agreement is to allow the holder of confidential information (such as a product or business idea) to share it with a third party. But then the third party is obligated to keep the information confidential and not use it whatsoever, unless allowed by the owner of the information. There are usually standard exceptions to the confidentiality obligations (such as if the information is already in the public domain). See The Key Elements of Non-Disclosure Agreements.
Although you’ll often need to make a specific financial commitment and meet certain regulations to open a franchise, there’s a lot you get in return. You’ll get the built-in name recognition that brings customers in, as well as guidance on everything from hiring to keeping local regulators happy. Before you get started, there are a few important things to know.
In this article we’re going to discuss how you can finance the purchase of a new franchise. We’ll discuss where to find franchise financing and what you need to consider before jumping in. We’ll also give you some options to think about if you actually need working capital financing for your existing franchise. Before we dive in, let’s take a quick look at your two best options for franchise financing.
If you prefer that we do not share this information, and would not like to receive targeted advertising as described above, please see our Opt Out page. Note that if you opt out, you will still receive advertising. Also, if you opt out and later delete your cookies, use a different browser, or buy a new computer, you will need to renew your opt out choice. If you would like to stop receiving Credit Based Offers as part of your enrollment in certain CIC products and services, please call Customer Care at 1-866-617-1894
×