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Article: Abnicholas.com
Franchise Financing-Things You Need To Know
Most of us at some point of time must have thought about running our own business. With that thought in
mind, you probably spend your nights dreaming about crafting a perfect business plan with opening
balances,3 years of projected cash flow, loan paying off and what not. Buying a Franchise may be the best
option for those dreaming of having their own business and being their own boss , as the wannabe franchisee
is actually buying an established business that is successful; thus, substantially lowering the risk of failures as
compared to those who start fresh ventures of their own.
Though franchises may look like a short cut to finding success, don’t forget that ensuring a profitable business
might be hard task without the right financing. That’s where franchise financing comes in scene. Business folks
often use the term ‘Key to success’ - the key to success in case of franchise is to timely finance it. So what then
is this franchise financing. It is the process through which specialist franchise loan agencies address the exact
financial needs of a franchise industry. Once you have decided on your franchise option and done your initial
homework, the only question left to be answered is how you are going to pay for it? Here’s what you need to
know if you are looking for franchise financing
You need a business plan to start with
None of the financial institutions will lend you money without getting an outline of what you plan to do with
it. Therefore constructing a business plan which will satisfy the lenders criteria is most important. You can take
the help of your franchisor in developing a plan.
Fill out the application thoroughly
Lending is all about paperwork. Therefore if you do not want your financing request to be declined, get your
important papers ready and handy.
Don't get greedy
Overstating your expenses in a hope to have some reserve for covering unforeseen expenses can prove to be
the biggest obstacle between you and your franchise dream. Your loan should cover only the amount that you
need to run the business.
Tell them how you'll pay them back
Financial institutions like to know when and how the money will return to the bank and this is one thing which many tend to ignore. Therefore preparing the expense sheet and extrapolating the repayment dates is very important for earning your lenders approval.
Some potential franchise financing sources include the following:
Personal savings and investments
Borrowing from friends and family members
Taking out a small business loan from a local bank or credit union
Obtaining a second mortgage on your home
Article: Abnicholas.com
Working with outside investors or investment capital firms
Obtaining a loan from the U.S. Small Business Administration (SBA)
Getting financing for your franchise is your gateway to becoming your own boss. Becoming familiar with the
financing process for franchises will help you become prepared for the road ahead - the road toward self
employment! To know more on how to finance a franchise, visit Abnicholas.com
ABOUT THE AUTHOR
Nick Bentley is an expert in credit functions who also likes to write many interesting articles and blogs, helping
people to understand these concepts and take sound finance decisions. He recommends Abnicholas.com if
you wish to understand how to finance a franchise.