Owning one or more franchises can be an excellent business move. You’re buying into an established name and immediately receive the benefits of name recognition, flexibility, and ongoing support. Like any other type of business, purchasing a franchise requires a large amount of cash that most would-be business owners just don’t have. That means you will need to obtain at least one loan from outside sources.
SBA Loans for Franchises
The Small Business Administration (SBA) offers low interest loans, grants, and other forms of financial assistance to new and small business owners who meet certain qualifications. For franchises, that includes previous industry or management experience. Additionally, you need to have a good credit history and score. The SBA will not approve a loan request if you have any bankruptcies listed on your personal or business credit report. Other requirements to obtain an SBA loan for franchises include:
- Meeting the minimum size for small businesses
- Business plan
- Offering a form of collateral such as a piece of real estate or a vehicle
- Financial statements such as past tax returns or bank statements
- Signing a personal guarantee that you will repay the loan even if you go bankrupt, sell the business, or retire
- You are buying into successful franchises that have been around for at least two years
Consider Alternatives to SBA Loans
As you can see, applying for and receiving an SBA loan is not easy. If you prefer to skip it or just don’t have that long to wait for an approval decision, Painted House Financial offers several alternative forms of business financing. We would be happy to go over all financing options we offer and accept your application during a personal consultation. Please contact our company today to reserve a time to meet with a business advisor. It could turn out that loans for franchises is not your only option after all.
