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Thinking of purchasing a franchise, or additional franchised location? Owning a franchise provides both the flexibility of being a small business owner, while stilling getting support and infrastructure of a large corporation, but usually require lots of capital. Today's average startup cost of a Franchise can range from $40,000.00 to several million. In today's economy, why used your money when you can use someone else's?
If you need a business loan to make it happen, there are a few options available, and our experts will know exactly which one is best for you. Here are the basics you’ll likely consider:
Be sure to factor in your franchise fee, royalty fees, and other possible costs needed to start the franchise. Franchisees often need to pay unique costs in exchange for specialize training, operating guidelines, and marketing from the parent company. Some franchisors may help finance new franchises by waiving fees or recommending certain lenders to help franchisees get loans.
Many traditional lenders are more hesitant to approve loans if you don’t have experience or a solid track record as a business owner. However, several companies specifically specialize in funding new franchisees. These franchise financing companies are more likely to lend money to new businesses as they know the risks you’re taking on and the ins and outs of the business better than other lenders.
If you are not currently a business owner applying for funding through a business, your personal credit score will be one of the most important factors lender look at when you apply for franchise financing. Financial institutions typically require personal guarantees for small business loans. They may require collateral and a down payment as high as 20% to 25%.
If your personal credit is under scrutiny, a general rule of thumb would be for the business owner to have minimum credit score of 600. To get an SBA loan you need a score in the range of 640. A credit score of 700 will provide the largest biggest number of financing options and best terms for a bank loan.
To learn about the process of acquiring franchise financing for your business visit our Frequently Asked Questions page. Ready to apply? Start your application now and get matched with up to $500,000 today!