Franchises are worth considering because opening a business can be risky, especially if you don’t have prior experience juggling all the things that come with it. You’ll need to choose a name and image for your brand, make sure you have the right staff and build a full suite of products or services to meet demand. Even if you have mentors or a network of friends who are small business owners, you’ll often find that you’re struggling with important decisions.
Dave Crenshaw is the master of building productive leaders. He has appeared in Time magazine, USA Today, Fast Company, and the BBC News. His courses on LinkedIn Learning have received millions of views. He has written four books and counting, including The Myth of Multitasking: How "Doing It All" Gets Nothing Done, which was published in six languages and is a time management bestseller. As an author, speaker, and online instructor, Dave has transformed hundreds of thousands of business leaders worldwide. Find out more at DaveCrenshaw.com.
If you own an existing franchise and are looking for working capital financing, then you’ll likely have even more options than you had when you started your business. These loans can be used to fund any business activity, such as to make payroll or to make equipment purchases. The table below shows some of the best options for working capital franchise financing and who each might be a good fit for.
We love this lender for their sterling reputation, excellent customer support, and reasonable terms and rates. But again, you’ll need to already have an established franchise to qualify, as well as good credit. This loan also takes longer to apply for (and receive) compared to most other online franchise loans, and it can potentially take a couple months for the money to come through. You’ll need to submit all the documentation you’d need to get a traditional SBA loan, and it will be helpful if your franchise is already listed in the SBA Franchise Directory. Even though there are a few more hoops to jump through than with other alternative lenders, SmartBiz is still one of the quickest ways for a franchisee to get an SBA loan.
He is a nationally recognized speaker and blogger on the topics of leadership, communications, decision-making, problem solving, and other critical business skills. An honor graduate from West Point, Mike served in the US Army as a combat arms officer. Before founding his own company, he was an assistant professor at Duke University, a consultant at McKinsey & Company, and an executive at Capital One and Scotts Miracle-Gro. He is the author of One Piece of Paper: The Simple Approach to Powerful, Personal Leadership (www.onepieceofpaper.com), Lead Inside the Box: How Smart Leaders Guide Their Teams to Exceptional Results (www.leadinsidethebox.com), and The Elegant Pitch: Create a Compelling Recommendation, Build Broad Support, and Get it Approved (www.elegantpitch.com). Mike's blog and the programs he teaches can be found at www.thoughtleadersllc.com.
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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.
The first thing you want to do before approaching any lender is determine what your net worth is. To do this, use a personal balance sheet to list both your assets (what you own) and liabilities (what you owe). Under assets, list all your holdings--cash on hand, checking accounts, savings accounts, real estate (current market value), automobiles (whether paid off or not), bonds, securities, insurance cash values and other assets--then total them up.
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.
Offering medium-term installment loans with repayment periods as long as 5 years, Funding Circle is a lending partner for established franchisees with a strong credit history. Specifically, you’ll need to be a franchisee with a business at least two years old and have a credit score of at least 620. For qualified applicants, Funding Circle has the advantages of offering faster funding than a bank loan would, as well as offering relatively low rates and fees.
Our franchise clients have been recommended a variety of business funding programs such as merchant cash advances or short-term working capital loans. Both options can allow you to cover a massive upfront cost, increase staff, launch a local ad campaign or pay a series of coinciding bills. Since profit margins for restaurants and retailers are already on the low side, we can provide the means to make important payments ahead of schedule and lessen the blow from weekly deductions.
In most cases, franchise owners provide technical support, equipment, and other necessary materials to their franchisees. Also, fellow franchisees can merge and share best practices, business approaches, and marketing strategies to colleagues whose business acumen and management skills are still developing. Simply put, there are a lot of good reasons why starting a business by buying a franchise will be a success.
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.
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.
More Franchise Loans, More Franchise Launches, More Franchise Revenue. In today's economy many top franchises face a significant challenge: access to funding. With ample interest from entrepreneurs ready to open new locations or expand existing ones, the difficulty of accessing capital significantly slows the execution of opening such franchises, costing both the franchisee and franchisor time and money.
A Rollover for Business Startups (ROBS) lets you take retirement funds from a 401(k), traditional IRA, or other eligible retirement account and invest them in your franchise, without having to pay taxes or an early withdrawal penalty. You can fund all or part of your business through a ROBS. Funds from a ROBS can be used as a down payment on larger financing, like an SBA loan, or to bridge the gap between other piecemeal loan financing options, like equipment leases, etc. Funds from a ROBS can also be used for franchise fees, consulting fees, and other costs that traditional loans often can’t be used for.
There are probably understandable reasons for your bad credit. Most of us are still bouncing back from the recession, and some businesses were hit harder than others. Whether or not you decide to get a “bad-credit loan,” building up your credit is planning for the future of your company. Once you raise your credit score, it will be much easier to secure funding as your company grows.
To become an officially recognized business entity, you must register with the government. Corporations will need an "articles of incorporation" document, which includes your business name, business purpose, corporate structure, stock details and other information about your company. Otherwise, you will just need to register your business name, which can be your legal name, a fictitious "Doing Business As" name (if you are the sole proprietor), or the name you've come up with for your company. You may also want to take steps to trademark your business name for extra legal protection.

But even if you’re not an internet startup or these techniques don’t feel right to you, you can still take steps to get money coming in quickly. If you run a service-based business, you can structure contracts so that clients have to pay a certain amount up front or at agreed milestones, instead of all at the end. With long-running projects, this can make a big difference to your cash flow. You can also offer special discounts and limited-time offers for people who sign up as early customers.
StreetShares is dedicated to helping U.S. military veteran entrepreneurs get funding for their small business ventures, which is why it is a good place to look if you want to start a small business and you’re a veteran. It’s free to see if you qualify for a loan, which is offered in terms of three months to three years, for up to $100,000. Businesses must be at least one-year-old or have at least $100,000 in revenue to qualify. You also must be a U.S. citizen and have decent credit.
Remember that a business is franchised for two reasons: to expand the business and to raise capital. So if you have a reasonably good credit record and pass all the financial requirements, most franchisors will bend over backwards to get you on the team. The help that franchisors provide to help you get financing usually includes assistance with business plans and introductions to lending sources. In many cases, franchisors serve as guarantors of loans you take out.
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.
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