Franchising is a popular way for individuals to grab part of “The American Dream”-owning a business. In fact, there were over 750,000 franchise business establishments in operation at the end of 2021. There are two major initial factors in becoming a franchise owner: first, choosing the right franchise to match your skills, interests, and passions, and second, getting franchise funding.
Why is Franchising So Attractive?
Franchising enables an aspiring entrepreneur to skip the struggles involved with creating a business from scratch. It enables an owner to buy into a business that has an established and well-defined operating system, some brand name recognition, a training program, ongoing operational support, assistance with marketing and advertising, the brand’s purchasing power, and some cases, access to franchise funding.
Ways to Get Franchise Funding
Here are some frequently used means of obtaining franchise funding:
• An SBA-backed loan.
The Small Business Administration backs small business loans that are provided by its partnered banks and it reserves a portion of its allotted loans for franchise owners. These loans offer more favorable interest rates and terms compared to conventional loans.
• Conventional bank and credit union loans.
Banks and credit unions offer personal loans to those who have good credit.
• Partners or investors.
Some entrepreneurs get franchise funding by getting investors or securing partnerships that provide the funding.
• Personal funding.
Funding to purchase a franchise can come from personal sources including using funds from a 401(k) plan, taking out a Home Equity Line of Credit (HELOC), using savings, or cashing out other investments.
• Alternative and private lenders.
There are other lenders who will provide funding and their qualifications and financing may be easier than conventional funding sources.
• Franchise financing.
Some franchise brands will provide franchise funding from the franchisor itself or from its financing partners.
Seek Expert Financing Assistance
Contact the business lending experts at DAL Commercial Capital. We offer many different loan types including franchise financing. Our experienced and certified financing professionals can help you get the loan you need.