The good news is both traditional and alternative lenders are making more loans. A strong economy and record low unemployment rates in 2018 are making all this possible. But a good credit score still carries great value, and if your score happens to be on the low side, here are some lenders you can take a look at when it’s time for getting a small business loan.
Government loans are typically offered through banks and credit unions that partner with the Small Business Administration (SBA). The SBA is a U.S. government body, with the motive of providing support for small businesses and entrepreneurs. For each loan authorized, a government-backed guarantee offers serious credibility, since the lender knows that even if you default, the government will pay off the balance. These loans can be applied to a number of uses, such as:
And don’t forget that unlike their independently-owned competitors, franchise owners don’t get to choose when to schedule expenses or which suppliers to work with. Their business model might have been passed down by the franchisor but it’s up to the franchise owner to figure out how to grow the business without endangering profits or failing to cover mandatory expenses.
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.
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.
There are a few companies that specialize in helping franchise businesses find funding, usually by matching franchisees with financing options. Considering the overwhelming options for franchising and the intimidating array of options for financing your endeavor, referring to or working with one of these matchmaker-advisers can be a good idea, especially for those who don’t have a clear idea of what type of franchise they are most interested in.
You’re applying for a business loan, and you may even be organized as a corporation or LLC. However, lenders will almost always want to hold you personally responsible for the loan. If they don’t do that and the business fails, there’s nobody left to repay them. But if you make a personal guarantee on the loan (which is likely a requirement), they can go after you personally, and your personal credit will suffer if you don’t repay.
SBA loans or loans that are backed by the Small Business Administration, a federal agency, do not typically need collateral.   Even startups can get business loans without collateral through the SBA. Technically, banks or lenders will not decline your business loan application if you have no collateral. However, there has to be some kind of security. You may extend a personal guarantee. There could be some assets, whatever form and shape, which may have some tangible value and that can be attached to the loan as security.
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.
Despite the relatively easier access to capital that a franchise owner enjoys, there are many different elements to think about before purchasing a franchise. Each franchise is operated differently and will come with its own set of operating and start-up costs. When considering pursuing franchise business financing, here are a few things for you to think about:
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!
You’re applying for a business loan, and you may even be organized as a corporation or LLC. However, lenders will almost always want to hold you personally responsible for the loan. If they don’t do that and the business fails, there’s nobody left to repay them. But if you make a personal guarantee on the loan (which is likely a requirement), they can go after you personally, and your personal credit will suffer if you don’t repay.
You can arrange to borrow from ordinary commercial banks or credit unions for your new venture. According to the Small Business Administration (SBA), new franchise owners have a higher tendency to borrow from commercial banks than new business owners. Lenders prefer advancing cash to new franchises over other new businesses since they already have trust in the brand and business model of the business being funded.

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?


A microloan is similar to a traditional bank loan, but they often come from alternative lenders like credit unions. A microloan tends to be easier to get for those with subpar credit because the loan amounts, as the name indicates, are small, typically fifty thousand dollars or less. Because of this, the credit requirements for these loans are also lower. If this amount of funding suits your needs, this is a good option. The SBA has a microloan program, and there are several alternative lending options such as Prosper and Zopa.
Personal loans are widely available, but if you’re trying to borrow for a small business, you’ll find that the process is more difficult. If you’re thinking of borrowing to start or grow your business, get started and get organized long before you fill out an application. Lenders want to be sure that they’ll get repaid, which means they’re looking for several criteria:
The last part is often translated as “often go awry”, and I’m sure you understand the sense: no matter how carefully you plan, things rarely go as expected. We live in a complex, interconnected world, and even if you do everything right, your business could be knocked sideways by a sudden economic meltdown, a real estate crash, a war on the other side of the world that raises prices for your raw materials, the sudden entry of a powerful competitor into your turf, and much more.
Sometimes it makes sense to tap 401(k), Individual Retirement Account or other retirement funds rather than seek a loan. But rather than just taking an early withdrawal, which may be subject to taxation, you may want to consider setting up a C corporation that will own and operate the business. Then roll over money from your self-directed retirement account into that corporation’s profit-sharing plan and direct that those funds be invested into the franchised business. But this is a risky option: If the franchise fails, your retirement fund can be wiped out. Check with a professional on possible tax implications, and consider the tradeoffs carefully.
If you are under age 59 and your IRA is one of your largest assets, you still may be able to take advantage of this avenue without accruing the 10-percent penalty associated with early withdrawal. By taking Substantial Equal Periodic Payments spread over a minimum of five years, based on your life expectancy, and a set of annuity tables published by the IRS, you can eliminate the 10-percent penalty, although the money is still taxable.
ApplePie Capital can offer loans for borrowers that need financing in between an SBA loan and other expensive alternative loans. You must borrow a minimum of $15K to finance specific equipment, or at least $100K for any other needs. The interest varies depending on a number of factors, and Apple Pie Capital charges a one time 4.5% origination fee on all of their loans.
None of the information displayed on www.applepiecapital.com (the “Website”) constitutes an offer to provide investment advice. The offering of securities is being conducted pursuant to an exemption from registration under the Securities Act of 1933, as amended. There shall be no offer or sale of any securities without the delivery of confidential offering materials and related documents. ApplePie Capital does not (1) advise on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax or transactional advisory services.
Paula is a New Jersey-based writer with a Bachelor's degree in English and a Master's degree in Education. She spent nearly a decade working in education, primarily as the director of a college's service-learning and community outreach center. Her prior experience includes stints in corporate communications, publishing, and public relations for non-profits. Reach her by email.
Many business owners, however, are under the mistaken impression that they are completely protected from personal liability by filing a Certificate of Incorporation for a corporation. This is not true. The mere process of incorporating does not completely protect the business owners. To lessen the likelihood of such personal or shareholder liability, you should make sure to adhere to certain procedures:
One type of financing you'll want to think twice about is a home equity loan. While you'll be personally responsible for repaying any loan your business takes out if you are a sole proprietor or a co-signer, a home equity loan carries a level of risk that unsecured debt doesn't. Your credit could be hurt if your business doesn't repay money you borrowed, but your house isn't at risk in most circumstances unless you've taken a home equity loan.

Many franchise owners have likely avoided small business loans because they are busy enough already. When you open a new franchise, you must simultaneously take on the roles of recruiter, accountant, sales executive, and HR manager. But United Capital Source’s franchise business loans can be accessed in just a few business days, and you don’t have to play three rounds of phone tag just to have a question answered. With a merchant cash advance, payments are automatically deducted from sales and therefore require no manual action from the business owner. It is literally impossible to “miss” a payment.

If you do decide you’re going to need space, consider the number of employees you’re going to need and the equipment that will fill the space—chairs, photocopying machines, a fridge, a coffee machine, a reception area, a meeting room, and so on. Furthermore, how quickly do you expect to grow? If rapid growth is in the books, rent a space where there is room for growth and so that you don’t have to change your business address.

An SBA loan has two major disadvantages for franchises. First, it takes a significant amount of time (30-90 days) to fund. Second, you can’t use the funds from an SBA loan to cover many startup costs, including franchise fees. Those will have to be paid as an out of pocket cost. However, if you can live with these two disadvantages, then SBA loan rates are typically the lowest you’ll find. You can use our SBA loan calculator to determine what your monthly payments might be.
The brand you choose to work with may provide upfront estimates of how much it will cost to start a new business and can also give you information on monthly and year-over-year revenue goals and expected progress. This information, if available, is often found in Item 19 of the FDD. However, a franchise is not required to provide this information in their FDD - so speaking with several existing franchisees is always a wise choice. Based on this data and your own projections make sure you understand when your business will break even factoring in both expenses as well as the loan payments and always assume there will be unexpected costs. When determining your loan amount make sure to include working capital to get you through the ramp-up period of the business until the business can support expenses and loan payments. When lenders review your loan application they will pay attention to several key things, but 2 items that you should be aware of are Loan To Value (LTV) and Debt Service Coverage Ratio (DSCR). LTV is a measure of the total value of the loan amount compared to the collateral pledged. Lenders will look at the collateral as a secondary source of repayment of the loan and in many cases with a start-up financing may look for collateral to cover the full loan. In cases where there is not enough collateral the lenders will look to other strengths of the deal. DSCR is a measure of the cash generated by the business available for the loan payments. The higher the DSCR, the better because in the bank's view there will be a cushion of cash just in case there are unforeseen problems or slow periods for the business. A lender will typically look for a minimum DSCR 1.20x or more. If your projections don't show the ability to service debt lenders may shy away from your loan request so it is important to understand the accuracy of your projections.

Visuals – As Instagram is a visual platform, special attention has to be given to the visual aspect of your posts. As well as choosing a color scheme to match your brand, you should also use a consistent filter. Using the same filter for your posts will help users recognize your images. For instance, Madewell’s Instagram incorporates its color scheme for consistent images and branding.


“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.”
Register your business with the Vets First Verification Program to be eligible for special opportunities to do business with the government. Small businesses that are owned and controlled by veterans and service-disabled veterans, and verified through the program, may also be given priority when competing for federal contracts. Learn how to apply, and find out which documents you will need to submit. You can also find VA-certified business counselors in your state for free help.  

Most people spent *some* amount of money, even if it was just the cost of a $50 business license or a $10 domain name. But far more important than money was the investment of sweat equity -- taking the time to make something meaningful. Brett Kelly wrote Evernote Essentials, a guide to the free Evernote software. His initial goal was that it would make $10,000 over the course of a year. One year later, it had made more than $100,000. Initial startup costs were essentially zero.
Depending on the size of your loan, your financial statements and accounting records will be reviewed carefully by the lender. So make sure they are complete, correct, and thorough—including balance sheet, income and loss statements, and cash flow statements. The lender will analyze your cash flow, gross margin, debt-to-equity ratio, accounts payable, accounts receivable, EBITDA, and more, so be prepared to answer questions on those topics. Consider having your accountant look over your financial statements to anticipate issues a lender may raise.
In his courses, Drew merges the theory taught in a traditional classroom setting with more than three decades of experience, providing a real-world marketing and innovation experience. Drew's earned three prestigious teaching awards and is honored to have been a guest lecturer at Columbia University, Yale University, the Wharton School of the University of Pennsylvania, the University of Michigan, the University of Chicago, the Kellogg School of Management at Northwestern University, and Duke University.
When you get a HELOC your personal home will be used as collateral. This means that if you fail to make payments in the future then you could lose your home. That is the risk that comes with the benefits of receiving access to low interest rate funds as you need them. With a HELOC you can borrow up to 80-90% of your home equity with an APR as low as 3%. You must have a credit score of at least 650 to qualify.
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.
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.
If you identify areas of weakness, you’ll need to make a plan for dealing with them. If you don’t have a head for figures, perhaps you could partner with someone who does. Or you could hire an accountant, or improve your own skills by checking out some of our super-simple accounting tutorials or doing other training. If you’re no good at designing websites, hire someone to do it for you.
If you have pristine credit, plenty of assets (along with collateral) and relevant experience in the related field, a bank business loan to start/purchase a franchise is possible. But, being that a franchise purchase is essentially a start-up, banks tend to shy away from providing loans to franchises because of risk. But banks do offer terms loans, lines of credit and equipment leasing for existing franchises. Will require good credit and a history of profitability.
Congress passed the Commercial Motor Vehicle Safety Act of 1986 to ensure that drivers of commercial motor vehicles are qualified to operate those vehicles. States have the right to issue a driver's license, but they must meet minimum national standards when issuing a commercial driver's license. The Commercial Driver's License (CDL) Program places requirements on the commercial motor vehicle driver, the employing motor carrier, and the states.
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Venture capitalists tend to start investing at $1,000,000, and they prefer to invest in high-growth and high-risk businesses. High-growth investment means the venture capital investor would see a return in 3-7 years by selling the company or going public. Venture capitalists tend to require a large amount of equity in your business, including a position on the board of directors.
Negotiate the startup and operating costs: When you buy a franchise, there is a pretty long list of things that you need to buy before you can open the doors to customers. The cost for such items will be noted in the Franchise Disclosure Document. If you negotiate, the franchisor may be willing to absorb the cost of some of these items for you, like discounting your franchise fee.
One of their loan programs is the SBA 8(a) business development program. According to their website, SBA’s 8(a) business development program is specifically dedicated to providing business assistance to entrepreneurs who are members of a socially and/or economically disadvantaged minority group who need help accessing mainstream economic capital. This program is divided into two sections and requires a nine-year commitment. The first four years are dedicated to development, and the remaining five years are a transition stage.

Negotiate the startup and operating costs: When you buy a franchise, there is a pretty long list of things that you need to buy before you can open the doors to customers. The cost for such items will be noted in the Franchise Disclosure Document. If you negotiate, the franchisor may be willing to absorb the cost of some of these items for you, like discounting your franchise fee.


ApplePie currently has partnerships with 42 franchises, such as 7 Eleven, Dunkin’ Donuts, Jimmy John’s Pizza, and Wetzel’s Pretzels. Other franchise brands can get loans through ApplePie, though the process might take a little longer. ApplePie offers loans for both new and existing franchises, including franchise startup loans, loans to purchase an existing franchise, franchise equipment loans, franchise refinancing loans, and more.
Despite these indicators, financing remains a problem for potential franchise owners.  According to Entrepreneur magazine (January 2013), there’s still an 18 percent lending shortfall in the franchising industry. In a bid to boost franchise ownership, many franchisors are taking matters into their own hands and offering financing programs of their own. Meineke, The UPS Store, Gold’s Gym, Masasge Envy and Instant Imprints are just a few examples of franchisors now offering financing to qualifying first-time and multi-store franchise owners.
Once you have chosen a name for your business, you will need to check if it's trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
The second step is to be strategic about how and where you apply for a loan. Key targets for your loan application would be your own bank, local business lenders and national lenders. Within that group, it is also important to target lenders who may be familiar with the brand and have made loans to other franchisees. That said, don't use a shotgun approach and apply everywhere. This approach can lead to inefficient use of your time and money as the process can lead to several declines from lenders as you blindly submit applications. This process can take up to 120-190 days before you even get funded. Additionally, some lenders charge application fees so it can get expensive, but more importantly, a lender may do a "hard" credit pull on you when you apply. Multiple hard credit pulls within a timeframe will actually hurt your credit score and decrease your ability to get a loan. One alternative is to use a service like BoeFly, which puts you in the driver's seat. It allows lenders to evaluate your loan package and credit and engage with you directly without officially applying at the bank. Only once it seems like it may be a good match will the lender issue you a proposal or term sheet on the financing and then officially invite you to apply at the bank - thereby saving your credit score and time and money. Unlike other marketplaces and "connecting" websites, BoeFly can significantly reduce your time of origination by up to 75% as well as your costs.
Despite the relatively easier access to capital that a franchise owner enjoys, there are many different elements to think about before purchasing a franchise. Each franchise is operated differently and will come with its own set of operating and start-up costs. When considering pursuing franchise business financing, here are a few things for you to think about:

United Capital Source offers franchise business loans, or franchise financing, to help franchise owners invest in growth, open new locations, and stabilize revenue amid upcoming bills or deductions. We understand that franchises deal with an above average amount of weekly and monthly expenses. This is why our franchise business loans tend to carry repayment systems that are different from those assigned to an independently-owned business. Terms will be structured to ensure your deductions do not prevent you from paying your rent and employees at the end of the month.
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]
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