So you Bought A Franchise…Next Step: Financing!

Buying a franchise can be an exciting and rewarding prospect in many ways.

franchise financing

However, if this is your first time buying a franchise, or if you’re interested in expanding or growing your current franchise, you might be wondering how to go about financing your decision to purchase or grow your franchise.

Franchise financing is an important consideration for any business owner. While commercial lending has experienced a notable shortfall in the years since the economic crisis of 2008, there are still options available for prospective or current franchise owners to make their next move.

One option worth looking into is financing through the U.S. Small Business Administration (SBA). Many banks participate in SBA programs, which provide loans guaranteed by the federal government, and are seen as low risk as a result. Interest rates are agreed upon between the bank and the borrower and may fluctuate as a result, but must still remain within SBA guidelines.

If you are a veteran, or a spouse of a veteran, you may want to consider the Patriot Express program through the Department of Veteran Affairs. This program is a streamlined way to quickly provide access to franchise financing to qualified applicants and could be the simplest way to get the funding you need. This is an excellent program that is focused on helping active duty military personnel who are seeking to make the transition from military life to civilian life.

Some of the most common places to look for franchise financing are banks, credit unions, and other commercial lenders. In order to qualify for a loan, you will likely need to complete an application process that includes the disclosure of a personal financial statement, your personal tax returns for the past three years, and verification of your ability to make a down payment.

Other factors may come into play, such as the type of franchise you are financing. The more secure, stable, and successful your franchise is, the more likely it is you’ll be able to easily secure funding. On the other hand, if your franchise is smaller and local, it may be harder to secure favorable funding without a proven track record of success.