Franchise Business Loan
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Franchise Loans for Your Franchise Business
Franchising a business doesn’t guarantee success. In fact, franchise companies are more prone to cash flow shortages due to a number of fees they need to pay. Aside from operational expenses and business investments, a franchisee must adhere to the fee guidelines set by the franchisor. With fees ranging from a few hundred dollars to thousands, it’s no wonder why franchisees often turn to franchise business loans for help.
Royalty and advertising fees are often taken from your weekly or monthly sales and earnings. Sometimes, franchisers must pay for their employees to undergo training programs that are required by the franchisor. And in some cases, franchisors might require local advertising on top of standard advertising fees.
Franchisees must also pay a franchise fee before they even own the business. On top of all of these mandatory expenses there are also other inevitable business expenses such as new equipment or furniture, and payroll. These costs can easily pile up, making it difficult to earn a profit or save money.
SMB Compass wants your franchise business to thrive in today’s competitive market. When you work with us, we will help you find the right financing product that positions your franchise up for success.
Many franchisers assist franchisees in establishing their businesses by providing financial funding. However, franchisees still require financing to meet their working capital requirements. Traditional Indian banks usually do not offer franchise business loans. On the other hand, franchisees can always get small business loans for franchises from several lending institutions to cover their working capital needs. They can even seek a variety of small business loans for franchises.
4 Ways to Utilize a Franchise Business Loan
Here are four ways on how you can use a small business loan to generate a maximum ROI:
Franchise Fee Payment
Royalty and Marketing Fees
Additional Working Capital
Most businesses apply for a loan to increase their working capital. Seasonal sales fluctuations, cash flow problems, and business expansion are just a few of the many reasons why franchisees apply for a business loan. You might not know how much money you need, but as your business grows, you’ll definitely need extra working capital to run your business.
Top 4 Franchise Loan Programs for Your Franchise
SBA 7(a) Loans
This type of program often offers more attractive terms compared to traditional loans, but before you can qualify for SBA funding, the Small Business Administration has to approve your franchise and list it on the Franchise Directory.
Otherwise, you won’t be able to qualify for an SBA loan. To get listed on the Franchise Directory, the franchisor must submit their Disclosure Document (FDD) to the Small Business Administration for review.
Business Line of Credit
It’s the lenders who determine the terms and the rate of interest associated with your loan after checking your personal and business credit, as well as your cash flow.
Multi-Year Term Loan
If you’re looking for a short-term loan to fund immediate financing needs, another type of lending product to consider is a bridge loan. This type of funding enables you to seize new business opportunities, fill in cash flow gaps, and pay for unexpected business expenses. Instead of using your personal savings or passing on attractive business opportunities, bridge loans can provide you with funds within 24 hours.
FAQ About Franchise Business Loans
What is a franchise business loan?
How do you qualify for a franchise business loan?
How long does the application process take for a franchise business loan?
How would you use a franchise business loan?
Is collateral required for a franchise business loan?
What are the different franchise business loan options?
Business lines of credit and bridge loans are commonly used to handle day-to-day operations, while SBA loans are used to refinance any existing debt as well as being used for the expansion of a business.