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.
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.
Approximately 75 to 100 franchisors are offering or working on offering creative financing programs for start-up franchise owners or those looking to expand. Programs range from zero-percent financing for a limited-term, lower license fees, reduced royalties and minority stake ownership by franchisors in multi-unit outlets. Each brand has its own offering, so down payments and collateral requirements will vary.
The International Franchise Association maintains a directory of franchises that are approved by the SBA to receive SBA funding. Each franchisor in the directory is required to submit a Franchise Disclosure Document (FDD) with information about its company to the SBA for approval. Working with a company that is pre-approved by the SBA will expenditure the process of obtaining an SBA loan for your franchise.
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.
Accounts receivable financing. An accounts receivable line of credit is a credit facility secured by the company’s accounts receivable (AR). The AR line allows you to get cash immediately depending on the level of your accounts receivable, and the interest rate is variable. The AR line is paid down as the accounts receivable are paid by your customers.
More than anything, focus on consistent, repetitive branding. Many marketing professionals believe in the “rule of seven," which means people need to hear or see your message at least seven times before taking any action. In today’s world of constant connectivity, you must make sure you’re seen and heard. The most common reason that people do not buy your product is that they do not know about it yet.

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.  

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.
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.

Maybe you want to build an empire and become famous, or create a wealth-generation machine that you can pass on to your children. Or perhaps you can’t convince anyone to recognize your unique vision and you’ve decided that it will never come to fruition unless you strike out on your own. Or maybe you’re thinking of self-employment because you’ve been unemployed for so long that you feel you’ve exhausted all other options.
Type of loan. Many types of business loans need to be secured by collateral, whether that’s by your mortgage, investment accounts, vehicle, life insurance or other assets. You may find that while you still need to secure them, SBA loans come with better interest rates and requirements that aren’t as strict as other financing options. The fact that they’re guaranteed for up to 90% of their amount by the government gives lenders the confidence they need to make offers to customers who may be more risky borrowers.
If you own a home, and have 20-30% equity in it, then you may be able to get a home equity line of credit (HELOC) with a low interest rate. These funds are great to start a business, and can be used for any of your startup fees, including your franchise fees. With a HELOC you can get access to a lump sum immediately and draw against the total as you need it. Like a normal business line of credit, you only pay interest on what you’re using.
Shannon is a writer and editor based in San Diego, CA. Shannon attended San Diego State University, graduating in 2005 with a BA in English. She is the former editor-in-chief of SteelOrbis, an online trade publication. Shannon has also published articles for LIVESTRONG.COM, eHow, Life'd, and other websites. She has been with Merchant Maverick since 2015, writing about POS software, small business loans, and financing for women entrepreneurs.
How do so many small businesses get started? It all begins with the right type of financing. Whether you're just starting up or you're expanding your existing business, you need money to get rolling. This guide will help you figure out the type of loan you need for your business and will look at the step-by-step process of securing a business loan:
Over 99 percent of all business entities in the US are small businesses, according to The SBA Loan Book: The Complete Guide to Getting Financial Help Through the Small Business Administration. These businesses represent over half of the private workforce and the private-sector output and over 40 percent of all private commercial sales in the United States.
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.
How do so many small businesses get started? It all begins with the right type of financing. Whether you're just starting up or you're expanding your existing business, you need money to get rolling. This guide will help you figure out the type of loan you need for your business and will look at the step-by-step process of securing a business loan:
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.

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.


Whitney Johnson is a leading thinker on driving innovation via personal disruption and cofounder of Clayton Christensen's investment firm. She is a regular contributor for Harvard Business Review and LinkedIn, and the author of Disrupt Yourself, which Publisher's Weekly called "superb, savvy, wise." Whitney also speaks and consults with Fortune 100 Companies. Recently, her work was recognized by the Thinkers50, which named her as a finalist for the 2013 Future Thinker Award. You can find her at whitneyjohnson.com.
Microlenders: If your company is especially small, you may need to opt for a microlender. These are non-profits that typically lend short-term loans of less than $35,000. They also have a much higher APR than bank loans but may be useful by helping you bridge a temporary cash-flow gap. Microlenders require detailed business plans and financial statements, so be prepared for some serious paperwork.

Personal Assets – Getting a traditional loan for a franchise can be difficult. The more personal resources you can bring to the table, such as retirement funds and personal savings, the easier it will be to buy a franchise. If you’re planning to get a bank loan or an SBA loan, then you at a minimum need a 10-20% down payment and some collateral (if the franchise involves the purchase of real estate, that can be used as collateral).
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.
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.
Small business owners are passionate about their ideas and tend to get excited about the little details, leaving the financials alone in the back of their business plan. It’s a mistake to put your financial information as an appendix or otherwise in the back because “it says that finance is not important,” advises Shelton. Your lender wants to feel comfortable that you have a plan for managing your finances, including paying back your loan, so keep your financial information up front in your business plan.
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.

Glad to see your comment! For ideas on which franchise you should work with you can check out our articles on the best coffee shop franchises or the best restaurant franchises. Additionally, to make sure you’re finding a strong franchise, you can read our article on the 50 best and worst franchises by SBA default rate. I hope that helps, and good luck with your future business!

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?
For-profit lenders are reluctant to issue loans to anyone who does not have a strong credit report and financial history. That is not the case with government small business loans. Obviously, a decent credit report is important, and you will have to follow the guidelines regarding the repayment period and the interest rate set by the government, but usually the interest rates charged by government loans are lower than those you could expect in the private sector.
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