December 09, 2013 // Franchising.com // Despite the press over the last few years that obtaining financing for a franchise is hard in our recovering economy, it is possible and several sources are identified below.
A good place to start your search for financing is your local community bank, especially if you have an established customer relationship with them. They will want to see a good credit rating, cash down, and some collateral will probably be required. Banks tend to favor well known franchises that have a successful track record.
Another source to explore is U.S. Small Business Administration (SBA) loans which are partially guaranteed by the government, making them less risky. A commonly used SBA loan is the 7(a) which is issued by a bank or other qualified lending institution and is partially guaranteed against default by the government. Many SBA loans will be based upon fluctuating interest rates up to a maximum which is tied to the prime rate. Some franchises go through a qualification process with the SBA enabling a streamlined approval process to be used.
Another government lending program is the Department of Veterans Affairs. The program, called Patriot Express provides a fairly fast approval time for active-duty military transitioning to civilian life, as well as spouses and survivors of veterans.
Don't overlook the franchise companies themselves. A small number of franchisers may defer a portion of the initial franchisee fee.
You also might want to consider tapping into your 401(k), Individual Retirement Account or other retirement fund. You should seek out companies that specialize in this type of funding because specific requirements must be followed. These companies can explain the benefits and risks associated. Many prospective franchise owners have used this program.
Clear Choice Franchising is not a financial advisory service or source of funding. Seek the guidance of qualified and licensed financial and lending professionals.
SOURCE Clear Choice Franchising
Clear Choice Franchising, LLC