Financing Options for Franchise Expansion

As the economy starts to turn around, franchisees often find themselves in need of funds to expand. As consumer demand increases and expansion makes more sense, the challenge of how to finance growth can create new dilemmas.

Although there are many benefits when turning to a traditional banker, there are also many pitfalls and drawbacks such as personal guarantees, additional paperwork, and higher collateral requirements. As a result, many franchisees are realizing the benefits of receiving a merchant cash advance. A merchant cash advance is a quick and easy way to finance franchise expansion as funds are often available within days. Merchant cash advance companies provide franchisees with working and/or expansion capital in exchange for a small fixed percentage of future their credit card sales.

As the name suggests, merchant cash advances are just that; advances of cash that the business owner requires in order to finance certain aspects of business, expansion being just one example. They are not loans so the terms of the advance agreement differ from a traditional bank loan. Where a franchisee will benefit most is that the repayment will be determined by the amount of monthly credit card sales volume, meaning that at times when business is slower and volume decreases, payments will be lower. Since there is no fixed payment, merchant cash advances provide more flexibility, making it more feasible for companies that do not have access to traditional sources of capital.

Leading MCA organizations like Next Level Funding (NLF) have been working with franchisees for years. NLF offers businesses cash advances for expansion and a host of other uses, whether you are looking to add another location, shake up a marketing campaign, increase inventory, meet payroll, or purchase new equipment or for almost anything you desire. "In general, our NLF franchisee programs are designed to say yes to more businesses and make a broader spectrum of those businesses eligible to take advantage of cash advances," says Bernie Lynch, General Manager of Next Level Funding. "We have created flexible programs tailored specifically to the franchisee world, in many cases funding more than 200% of a franchise's monthly credit card processing in as little as three days. We can help almost any franchisee with the capital and cash-flow they need to grow and manage their business." Another cash advance option available to merchants is Merchant Cash & Capital. MCC specializes in cash advance for restaurants and bars.

Whether looking to expand your franchise or if you could use additional capital for your business, a merchant cash advance may be the smart alternative for you.

Published: June 13th, 2011

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