3 Things to Watch Out for When Assessing Various Franchising Loans

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Friday, July 28th, 2017

If you have the drive and determination to run your own business, but would prefer to trade some control and potential profitability for added support and reduced risk, then a franchise might be the ideal opportunity.

However, franchise fees typically start in the 5-figures for smaller operations, and run into 6 and 7-figures for more established and visible brands. If you don’t have the cash-on-hand to buy a franchise — plus enough working capital to cover what is usually a lean start-up period — you’ll need to explore various franchising loans. Here’s what to watch out for to ensure that your path forward is safe vs. stressful:

  • Limited Options

Most lenders have limited experience with franchising loans, and will therefore try and steer you towards one of their products (e.g. conventional business loan, business line of credit, etc.). Make sure that the lending partner you choose has a full suite of financing loan options, and proven experience helping franchise owners succeed and thrive.

  • Slow Approval Process

Waiting weeks or months for your franchise loan application to be evaluated isn’t just tedious, but it’s risky. Most franchises are territory-protected, which means that you’ll miss out on the opportunity if another entrepreneur with cash enters the picture. As such, ensure that you choose a lending partner that evaluates and approves franchising loans within days — not weeks or months.

  • Difficulty Raising Additional Funds

As noted above, in the first few months of operation, most franchise owners face additional unanticipated costs — such as hiring staff, insurance, accounting fees, etc. If your lender balks or delays in working with you to try and boost your working capital, then your franchise ownership dream could come to a crushing and very costly halt. While no lender can guarantee that additional funds will be available to you, nevertheless ensure that you work with a partner who understands that, as the old saying goes, “sometimes you have to spend money to make money.” That is, they should do everything they can to help you succeed.

The Bottom Line

At National Business Capital, we proudly offer a full suite of franchising loans and options to cover real estate, equipment, inventory, and other costs of doing business. We also expedite and streamline the assessment/approval process, and are here 24/7/365 to help our clients succeed and thrive — including during the first few months when a foundation of lasting profitability is being built.

To learn more, contact us today with your questions or fill out our application! It only takes two minutes to complete, so what are you waiting for?

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