Franchise businesses serve as the backbone of the restaurant and retail industry. A successful franchise often starts as a small local business that catches the eye of savvy investors. Starbucks, McDonald’s, Walmart and Whole Foods are just a few of the many corporations that started as small mom-and-pop operations and were later franchised into nationwide networks.
1. Get organized. Getting an organized plan is the first step in any marketing effort. Make one. Start with brainstorming, create themes and transfer action items to a calendar or to-do list. Start small, and try to get a good ROI for everything you do. Create an elevator pitch: What can you tell people about your business, products and services in 30 seconds or less that keeps them interested and wanting more? Get customer input early -- if you are opening a storefront or restaurant, try hosting a soft opening or invitation-only event to get your kinks worked out and your mishaps and mistakes out of the way. Whatever you do, make a good first impression.
Equipment loans. Small businesses can buy equipment through an equipment loan. This typically requires a down payment of 20% of the purchase price of the equipment, and the loan is secured by the equipment. Interest on the loan is typically paid monthly and the principal is usually amortized over a two- to four-year period. The loans can be used to buy equipment, vehicles, and software. Loan amounts normally range from $5,000 to $500,000, and can accrue interest at either a fixed or variable rate. Equipment loans can also sometimes be structured as equipment leases.
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.
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.
Alternative business lenders are comprising a growing part of the financing industry as bank loans become increasingly hard to get. Franchise owners benefit from alternative franchise loans, which have less-strict borrower qualifications than traditional business or SBA loans, and also put the funds in your account a lot faster. Generally, alternative loans have higher rates than bank loans, but they represent an important source of capital to many small business owners, including franchise owners, who would not otherwise qualify for financing. Moreover, some of the best online lenders offer rates that are on par with big banks.
At some point nearly every franchise will seek a loan or working capital. Knowing your franchise financing options can be the difference between thousands of dollars saved or lost. If you are a franchise business owner seeking financing and need help understanding the options, please reach-out to one of our funding specialists and we’ll help you navigate the process.
There are more than 28 million small businesses in the United States, making up a whopping 99.7 percent of all U.S. businesses, according to the Small Business Administration. When you consider some of the most popular reasons to start a business, including having a unique business idea, designing a career that has the flexibility to grow with you, working toward financial independence, and investing in yourself — it's no wonder that small businesses are everywhere.
Various financial aid programs help certain types of businesses and borrower start up franchises. For instance, some companies have programs designed to attract women and minority candidates. Many others offer discounts on franchise fees for veterans who are interested in franchising. You can find a list of options in the International Franchise Association’s VetFran Directory.
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.
When starting out, your product or service has to be at least good if not great. It must be differentiated in some meaningful and important way from the offerings of your competition. Everything else follows from this key principle. Don’t drag your feet on getting your product out to market, since early customer feedback is one of the best ways to help improve your product. Of course, you want a “minimum viable product” (MVP) to begin with, but even that product should be good and differentiated from the competition. Having a “beta” test product works for many startups as they work the bugs out from user reactions. As Sheryl Sandberg, COO of Facebook has said, “Done is better than perfect.”
You should specifically start your search for a lender that has experience funding franchises. Some major banks such as Bank of America, HSBC, and PNC have specific programs targeting franchisees. Smaller institutions specialize in franchising in specific industries, such as restaurant franchise funding from Oak Street Capital, and hotel funding from Access Point Financial.
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.
As an industry leader since 2007, National Business Capital understands that every business has its own story, with their own unique goals for growth. NBC listens carefully to YOUR story before connecting you with a Global Marketplace of over 75+ Lenders to find the best franchise loans that fit your business needs perfectly. You will be paired with a Business Financing Advisor, who will be there to help answer any questions, and guide you through the financing process from start to finish.
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.
What You Need to Finance – Depending on what franchise you’re planning to buy, you may need to buy equipment, hire employees, purchase commercial real estate, and more. Craig Morgan, a managing attorney at Providence Law, says that some franchises, such as a car dealership, requires the purchase of commercial real estate. The things that you need to get started will affect what type of financing option is best for you.
He is president of Toister Performance Solutions, Inc., a consulting firm that helps companies improve customer service. Jeff has appeared on numerous lists of top customer service experts including Global Gurus' World's Top 30 Customer Service Professionals, ICMI's Top 50 Thought Leaders to Follow on Twitter, and HDI's Top 25 Thought Leaders in Technical Support and Service Management.
Franchisees who are operating a franchise location typically have their pick of financing options. We think the streamlined SBA loan from SmartBiz is the best option for those looking for up to $350K in working capital. With low SBA rates and 10-year repayment terms, these loans do not squeeze cash flow. Plus, SmartBiz has drastically reduced SBA loan funding times. Prequalifying online takes just a few minutes and they get loans funded in as little as 2 weeks.
As a member of the ConsumerAffairs Research Team, Kate Williams, Ph.D. believes everyone deserves easy access to accurate and comprehensive information on products and businesses before they make a purchase. She spends countless hours researching companies and industries before writing buyers guides to make sure consumers have all the information they need to make smart, informed buying decisions.
5. Social Media: Depending on your type of business, you will want a social media presence. LinkedIn, with more than 380 million members, is regarded as the business site for connecting with other businesspeople and offers excellent posting features for articles and blogs. Facebook is more of a social friends site than a business-focused site, but it’s also an excellent tool for “getting your word out” to your friends and customers. Both Linkedin and Facebook allow you to set up a commercial page for your new business.
The first step in applying for a franchise loan is making sure you are well-prepared before you connect with a lender. This means that you should have identified the franchise you wish to pursue, and should have your supporting documents and loan package organized and available when you engage with lenders. The goal is to make a solid first impression to show that you are prepared and will successfully put the lender's money to good use and can be trusted to repay the loan. Accessing capital to start your business is perhaps the most difficult step in the start-up process. An online service like BoeFly.com, (we specialize in franchise finance - see what franchise brands have to say about BoeFly) or working with a financial adviser can help prepare you to address any deficiencies within your loan package. Loan brokers will typically cost you a $2000 packaging fee or more, and they may charge the lender a fee of 1-2% of the loan amount, which may come back to you as a hidden cost in the closing costs or in increased interest rates. In contrast, BoeFly has several plans available starting at just $249 to help fully guide you through the process of building a professional, lender ready package and connect you with over 5,000 lenders.
Now that you have completed our QuickBooks Online tutorials, you should be convinced that you don’t have to be a certified public accountant or have an accounting background to learn how to use QuickBooks. You should also know that QuickBooks is a much better solution than using a Microsoft Excel spreadsheet to keep track of your income and expenses.
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.
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