How Can Franchise Financing Can Be Affected By Personal Credit?

franchise financing

What You Need to Know About the Relationship Between Personal Credit and Franchise Financing

Opening a franchise can be both exciting and a little nerve-wracking. For those who have spent significant time studying and planning the business, a franchise can be a wonderful, money-making investment. Before you can open your doors, however, you must find franchise financing. Your financing will likely come from a combination of the franchisor and a traditional lending institution. Before you officially request financing, you will want to ensure that all your business plans and documents are in order. There is one additional thing you must consider: personal finances. You might think that because you do not intend to use your personal assets as collateral that your own finances do not matter, but they do. Both R&W Commercial Funding Solutions and your franchisor will probably request information about your credit and your financial standing. The way you manage your own finances is a suggestion of how you will manage business finances.

For most business loans, lenders evaluate your business credit history. When you seek franchise financing, you probably have no business history; so instead they consider how financially-responsible you are in your personal life. The assumption is that if you know how to live within your means and you have a history of proving that you can be trusted with loans, then you will carry that skill with you into your franchise. Keep this in mind and review your personal finances before you apply for your franchise loan. Determine your net worth by listing all your assets and then subtracting all liabilities. Then contact the credit bureau to request a complete credit report. This will give you the ability to amend any incorrect information and to request that they add a note or explanation from you to clarify any negative instances on the report. You cannot change your true history, but a reasonable explanation of why you missed a group of payments may sway lenders to your favor.

Franchise financing is an essential step toward your dream of becoming a franchisee business owner. You may regret it if you do not take this step seriously enough to properly plan for it. Before you present your case to the franchisor or R&W Commercial Funding, know your net worth and contact the credit bureau. Even if you do not have spotless credit, you may be able to receive franchise financing, but you should be prepared to answer for any deficiencies the lender finds in your history. The earlier you prepare by living within your means and saving as much money as you can, the more likely you are to leave the lender’s office victorious.

Read More on the benefits of Franchise Financing through R&W Commercial Funding Solutions!