Franchises business loans, the need of hour

Franchise Businesses are in a boom. More and more People willing to start their own business are giving these chain businesses a thought for the sheer benefit of avoiding the initial struggles of setting up a business and marketing its products. Franchise businesses have gained immense popularity in the recent years and have contributed significantly to the economy in creating job opportunities and generating revenues.

The U.S. federal government's Small Business Administration (SBA) realising the potential of these businesses are have designed franchise programs to develop and motivate small business aspirants.

Banks and other financial institutions have been considering loans for franchise owners but with stringent eligibility criteria. An SBA backed franchises always has an advantage when it comes to sanctioning loans. The guarantee provided by the SBA secures part of the investment of the lenders.

SBA has a list of approved franchises and small business owners willing to get into franchise business can apply for a loan for setting up any of the approved franchise. Getting a loan on these franchises is very easy and banks easily sanction these loans backed by the SBA.

The loan application for SBA approved is processed without hassles. The documentation and other formalities are less complex. The SBA maintains a list of these franchises industry wise. So, you could either look for a name or a specific industry.

If your franchise is not listed in the SBA approved list then your application might take more time to process as because the banks would look into examining your profile in more detail. The banks would follow the same process of scrutiny as in the case of a general commercial loan applicant. So, it is better to check the list of SBA approved franchises beforehand. In this case you might be asked for a business plan, your credit history, financial statements for three years, budget allocation of the amount applied for, future projections, repayment options etc.

You should take a planned approach in applying for these loans. Getting a hang of the SBA’s process of scrutinizing applicants in advance will certainly help. Know about all the information sought and documentation required by the SBA and be prepared accordingly. Finding an SBA approved lender is equally important. Once you have found an approved lender, have collated all the necessary documentation asked for and have decide upon the franchise to start up with, it should not be difficult to get a franchise loans sanctioned.