That’s why we want to share some potential avenues that you can pursue to finance a franchise business, whether you’re interested in our TitleEase Franchise opportunity or some other type of franchise model. Here are seven options to consider when financing a franchise:
1 – Small Business Administration (SBA) Loans
According to the Wall Street Journal, about 10% of all SBA loans in the U.S. are for franchisees buying franchises. The 7(a) is the standard SBA loan available for franchisees. These loans are lower risk because even though conventional lenders issue them, they are partially backed by the federal government. The 7(a) Program lets you borrow up to $5 million to cover startup costs and to pay for things like equipment and supplies that your new business will require.
2 – Conventional Loans
If you belong to a credit union or have a good relationship with your bank, you may consider borrowing funds from them. In that case, you may be able to obtain a business loan with favorable loan terms, especially if you can back the loan with your home or other tangible property and have a good credit score. Most lenders will want to see a business plan and look at your experience and ability to run a successful business.
3 – Personal Loans
If you have fair to good credit, it’s typically easy to obtain a personal loan online. Sites like lendingtree.com or lendersclub.com not only let you review and compare offers from various lenders, but you can do everything online. Funding is usually fast as well, with many lenders depositing funds directly in your bank account within 1-2 days after loan approval.
4 – Short-Term Loans
Short-term business loans from a private lender can also be funded quickly and often do not require as much paperwork as other types of loans. However, these usually charge higher interest rates, and they must be paid back within a relatively short time, ranging from several weeks to one or two years.
5 – Borrow from Yourself
If you’re reasonably confident in your ability to run your own business, consider borrowing funds from your savings or retirement funds. Since home prices have materially appreciated in the last several years, another option is to refinance your home to cash in on its equity or take out a separate home equity line of credit.
6 – Borrow from Friends/Relatives
If you have parents, other relatives, or close friends willing to invest in your business, take them seriously. Just be sure the expectations and terms are clear, whether you will be paying them back or cutting them in on a percentage of your business profits.
7 – Use a Crowd-Funding Site
Consider asking for funds through a crowd-funding site if you have an extensive network of friends, family, coworkers, and acquaintances who you think would be willing to help you in your franchise endeavor. The most significant advantage to this type of funding is that you may never have to pay the money back. And if you want to pay back those who helped you at some point, you can do so by offering them free or discounted services.
Of course, before choosing any of the above financing options, you should: (1) determine the financing needs of your business, (2) identify the various financing options for your business, (3) understand all the available financing options, (4) understand the pros and cons of each of the financing options, and (5) consult with your financial advisor, accountant and/or attorney.
If you think you have what it takes to own a title business and would like to discuss further funding options for purchasing a TitleEase Franchise, visit us at http://titleeasefranchise.com or call 1-877-696-5462 to speak with a representative today.
The TitleEase Franchise System is an excellent opportunity for anyone interested in entrepreneurship. It is ideal for those who already work in or around the residential or commercial real estate industries or title insurance professionals seeking new opportunities.