Buying a franchise is now an established part of the “American Dream.” Thousands of entrepreneurs each year pursue the franchising path to own a business concept that is defined and established. However, owning a franchise usually requires a significant amount of capital, and for most entrepreneurs that spells the need for franchise financing.
How Much Does It Cost to Buy a Franchise?
The cost of buying a franchise depends on the business category and on each franchise brand. The costs generally include an initial franchise fee and ongoing royalties based on sales volume. Additional costs include costs of training, equipment, furniture or other building accessories, operating supplies, computer hardware, permits, insurance, legal and accounting costs, initial promotion and advertising costs, general operating funds, and contingency funds. The list of specific costs can be extensive, proving the need for franchise financing.
What are the Best Ways to Finance Your Franchise?
Franchise financing can come from these sources:
Some franchises offer their own financial assistance, either from the franchise entity itself or through its financial partners.
A commercial bank or credit union may provide a loan to open a franchise. Most of these loans will require substantial documentation and possibly some collateral.
The Small Business Administration (SBA) guarantees loans that are offered through its partnering financial institutions. These loans offer attractive rates and repayment terms.
There is a wide variety of alternative lenders that offer franchise financing.
Using retirement funds is an approach that can be used by borrowing against a 401(k) or 403(b) retirement account or by withdrawing money from a ROTH IRA.
How Can You Qualify for Franchise Financing?
Qualifying for franchise financing requires having a solid business plan, a good credit score, a healthy financial situation, and a clear commitment to the prospective business.
Seek Expert Financial Assistance
Contact Fortis Funding based in Glen Allen, VA. Having the capital for continued growth is vital for startup owners and entrepreneurs. We have a comprehensive portfolio of business loans to meet your needs now and in the future.