Franchise Business — How To Get Loans

When it comes to operating a franchise business, most people look first at available franchises’ track records to see which one is most likely to stay in operation. While this is a very important thing to consider, it’s not the first step you should make.

With today’s volatile economic condition, the first step is to come up with a good financial plan before even looking at the choices of available franchises. If you are uncertain about how and where to secure funds for your potential business, the following resources may be useful:

The Patriot Express

The Patriot Express is a lending program administered by the Small Business Administration or SBA. The program is geared towards:

- Active duty military personnel who are about to retire

- Military veterans

- Members of the National Guard

- Spouses of military servicepeople

Under the Patriot Express program, borrowers may borrow up to $500,000. Although the SBA does not provide this loan to applicants, many lender participants are eager to offer this loan because the SBA guarantees 75 to 85 percent of the loan. This means there are considerably fewer risks shouldered by the lending agency and so they are much friendlier to potential borrowers. It is also easier to qualify as the credit score required for it is not set so high.

The program also carries comparably low loan rates. Loans that are payable in seven years or less, charge only as high as 2.25%. Loans payable in longer terms carry only a maximum interest of 2.75%.

To be eligible for the loan, there are certain criteria that have to be met, including:

- The size of the business

- How the money will be used

- The kind of business

- Other ways to get funding

The VetFran Initiative

The Veterans Transition Franchise Initiative or VetFran was initiated by the International Franchise Association (IFA) to help military veterans. The IFA partners with more than 350 franchise corporations and encourages veterans to go into franchising by extending financial incentives. The program itself does not offer funding, but the IFA’s franchise partners do provide financing or help applicants choose the right lending program.

Franchise Funding Specialists

Finance professionals specializing in franchises can help develop a financial plan for your prospective franchise. You only need to provide them with information about yourself and your plans, and they will do all the work.

It is worthwhile to enlist the help of franchise specialists because of their knowledge and experience about the ins and outs of franchise operations. Their extensive network in the franchise business is also a big plus, freeing you from unnecessary stress and saving you time.

Another good reason to employ the services of franchise funding specialists is because they don’t charge anything until you get the loan you’re looking for. But before then, they’ll be coming up with several schemes of getting funding, as well as the actual figures that you’re likely to be dealing with.