Financing Your
Business Investment

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There are some ground rules for financing your business that you should be aware of that we will cover in this article. But in general, if your credit is good, you have management or solid work experience, you are able to make a down payment of up to 25%, then you should be able to receive financing. Apply On The Web is a great resource for all your business financing needs. Simply Click Here to inquire about business financing. Here are some noteworthy items about financing a franchise.

Typically, it is easier to finance a franchise than other business investments. There are several factors that make this so. Most franchises have a solid brand in the marketplace, and a solid track record. So lenders know they are backing a business that’s ‘been around’ and not a fly-by-night operation. Also, franchises historically have a lower failure rate than other types of businesses. This is attractive to lenders for obvious reasons.

Many people use 401k or IRA for the equity investment. Nearly all franchises require an equity investment and demonstration of liquidity. This can be up to 25% of the deal value. This may be difficult for some to obtain, so a 401k or IRA can be a good solution. There are ways to access these funds with no taxes, penalties and no repayment.

An SBA loan might be an option. The Small Business Administration (SBA) makes short-term and long-term loans to credit-worthy start-ups and existing small businesses that cannot obtain financing on reasonable terms through normal lending channels. Loan programs can include working capital to machineries and equipment to inventory and even real estate. Even more appealing is that many franchises are afforded a simplified underwriting process. The SBA maintains a list of franchise companies that have this streamlined loan process. The lender and/or SBA must still evaluate the typical underwriting factors such as credit worthiness, use of proceeds, character, etc. To find information on SBA lenders, visit the SBA website at www.sba.gov or ask the franchisor for a recommendation.