How to Find a Loan
for a Franchise Business Opportunity
Of the dozen
difficult aspects of selecting, starting, and
running a new franchise opportunity, few are as potentially
paralyzing as paying for it. Most of us have learned that money
doesn't grow on trees, and the average franchisee-to-be simply
doesn't have the cold, hard resources to make a business
purchase outright. Whether the goal is a Sterling Optical
costing no less than $100,000 or a Baymont Inn at $1mil, the
staggering line of zeroes at the end of the prices on those
business opportunities can sometimes be enough to discourage
even a veteran entrepreneur.
So what does the earnest and talented entrepreneur with a skinny
wallet do? The same thing I did to make my way through college:
take out a loan. The problem many people run into, though, is
that loans aren't always available to everyone, or at least they
don't seem like it.
If you've got good credit and enough assets, it shouldn't be too
hard to approach a bank or lending institution, even through
your franchisor, and get the sufficient funding to start your
franchise. There are even lenders you can approach via the
internet to get that startup loan that you're looking for,
Diamond Financial and Triple-AAA Financial Service are two great
options. But, in our dwindling economy with skyrocketing
interest rates, if your credit is even slightly off or you
aren't a homeowner with assets to leverage, chances are you're
going to find yourself pacing, biting your nails, and losing
precious hours of sleep over whether your financing is going to
come through or not. There are alternatives to needless worry,
however. Aside from the option of finding a partner, investors,
or someone in your family who has the cash to cosign the deal
with you, there is an alternative that has proven effective for
a good number of franchisees hoping for their own franchise
opportunities. That alternative is the US government.
Yes, you read that right; the United States government can
actually help you. Though they may be tapping your phone and
reading your email as we speak, they are genuinely concerned
with getting more small businesses, franchises included, up and
running, because that is what capitalism, and thus our nation,
thrives on. The department you're looking for in this instance
is the Small Business Administration (SBA), and they really can
get you the money that you're looking for. The way it works is
this: when a person interested in a small business franchise
can't get a loan from a private lender for whatever reason, the
SBA is able to step in and provide a guaranty to the lender as
high as $2mil, making a loan possible by taking the
responsibility for a potential business, and thus
loan-repayment, failure off the franchisee's shoulders.
There are, of course, some hoops for the potential franchise
buyer to jump through in order to get that SBA loan, but the
rules of engagement are a little different with the SBA than
they are with private lenders. Banks and other financial
institutions tend to look more at credit and assets than
anything else, because in our fading economy, their
responsibility is keeping their hands on dollars whether the
loan recipient succeeds or not, sounds cold, but we can't blame
them. The SBA, however, is far more interested in the business
model and the professional chops of the candidate; if they think
that this guy with this work from home business plan can make
it, he gets the guaranty. Their concern is not keeping their
hands on dollars today, but getting functional businesses up and
going to pump more dollars into the national economy tomorrow.
As a side note, because the SBA is interested in functional
business plans, they also already have a record of franchisors
registered with them, having already provided and cleared their
business models with the SBA, who agrees that their plans and
practices are lucrative and clean. This is a good resource in
determining what franchise to purchase as well as figuring out
if it will be affordable for you.
Though getting a loan can seem like a hopeless endeavor, there
are very real and very effective ways to get it done, without
having to leverage your car and sell the shirt off your back,
after all, no one is going to be comfortable coming into the
SIGNARAMA owned by that creepy shirtless guy. Your franchisor
and the Small Business Administration can help when things look
really dire. And when you've passed through the trial and learn
how it feels to both flounder and fly when it comes to financing
a franchise business, you can always go into business helping
others to accomplish what you have. Exclusive Commercial Lending
and IRA and 401(k) Retirement Plan Rollover are two companies
that allow you to do just that: make other people's business
dreams a reality.
