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A perceived obstacle that sometimes is mentioned from candidates I work with as a franchise consultant is this: “What is the best way to finance this franchise business venture?” This is a very legitimate question that needs to be addressed. A few, less-than-serious franchisee wannabes have absolutely zero clue of where they’ll get the money or even how much of an investment is involved. The vast majority, however, have at least some idea of how they will finance their business. They simply need some clear, concise information about what each option entails. Here are 3 franchise financing possibilities and what they entail: 1. SBA (Small Business Association) Loan. This is a great place to check out because the SBA offers favorable terms and recognizes the importance of our nation’s small businesses. They provide competitive rates, no points, and no penalties for pre-payment. As a potential franchisee, you may qualify for an SBA loan, based on criteria such as number of employees, business size, and annual sales. Theirs is a simple and straightforward process as compared to other options. 2. Other Investors. This could be a viable way to go, especially if the franchise you’re buying comes with a very popular brand, as the likelihood of success increases substantially. Be sure that your proposal is detailed and includes your business plan and specific goals, along with your past accomplishments and achievements, via other business ventures or employment. 3. Family And Friends. Maybe you are especially close with a certain relative who is well-capitalized and would be willing to loan you the money for your franchise business. Or perhaps you have financially assisted a friend in the past and he or she has been waiting for an opportunity to return the favor. Be careful here, though. If you do choose this option, make sure that the agreement is in writing, and is clear and concise. It’s not worth losing a friend or a close relationship over money. Whatever you choose, do your homework. Shop around. Consult with your accountant. Discover what programs are available that best fits your specific situation. As you can see, there are plenty of solid options to choose from.

Source(s)

Me. I'm a recruiter for the franchise industry with several years experience helping franchise seekers identify and attain their ideal franchise.

by bake

4 weeks ago

Asker's Rating: 

Although getting a personal loan is mainly based on your credit rating a business loan will take into account this along with the productivity of the business in question. Getting any type of loan at the moment is tricky with the current climate & you might end up paying extortionate amounts in interest - I'd shop around, explore your options! Although you are 18 and may have a credit card you won't have much of a credit history so a bank may be unwilling to give you a business loan, especially for such a large amount!

by Lola x- 4 weeks ago

Kate Almost no lender is going to lend an 18 year old £ thousands for a business venture nowadays. Sadly, you are just too high a risk. Sounds like you need enough cash to manage the business (a franchise...why a franchise?) for 6 months to 1 year. If you think £5k is enough to pay for wages, stock, location, wear & tear and still pay yourself for that time....then ok.....but sounds v low to me. Can't you strike a deal with Grandad. Pursuade him to let you run this part of his business on a decent salary. Be really successful at this for a couple of years ...and you'll have a track record that will mean borrowing to buy part of the going concern will be much easier. Good luck!

by aj at the bank- 4 weeks ago

It will be very difficult if not impossible. you are too young have no experience and no equity. The Banks only loan to people who they are sure are a good risk and have experience, they also want equity in a property so they can get their money back if you default.

by Kernow Lady- 4 weeks ago

Speak to your local Business Link about starting your own business and sources of funding. They provide a lot of free help and advice. Your age and possibly your lack of experience may be against you but they have information on schemes for young people - Princes Trust, Shell Livewire etc. They'll give you a realistic assessment of whether you can get funding or not. What you do need for any potential funder is a sound business plan. Again, Business Link can help you put that together. Most funders look for a least 50% of the required investment to come from you. Make sure you plan how you'll repay any borrowing, including any you've borrowed from yourself via your credit card. It's one of the most expensive ways of borrowing and it's easy to leave it as a low priority for repayment. Good luck!

by Rosemary P- 4 weeks ago