Financing is critical to any business venture. Most franchisees don’t have extensive experience with financial loans beyond mortgages and car loans. This can quickly become frustrating when they have to navigate the more complex and specialized world of franchising. Fortunately, they can use the following financial resources available to franchises.

Small Business Administration (SBA) registry

A franchisor can let the SBA review its franchise agreement for approval. Once approved, the brand will be on the SBA Franchise Registry, meaning loan applications by franchisees will be processed more efficiently by the SBA and its lenders. You can find the list of approved franchise brands on the SBA website.

SBA loans come with smaller down payments and longer repayment terms than conventional bank loans. The terms are ideal for first-time franchisees, as it eases their cash flow and lowers risk. Because the SBA loan approval reduces risks, it opens the gate for other lenders to help you with finance.

A bank credit report

Your franchisor may provide a credit report to your lender. The credit report becomes part of the criteria the lender uses to evaluate your application. The credit report will inform the lender and speed up the approval process. So if you are planning to go to a lender, let the franchisor know so they can assist with their credit report.

List of recommended lenders

When it comes to franchise financing, not all lenders are the same. With all the experience franchisors gained in the industry, they have collected a list of lenders their franchisees have succeeded with. Franchise brokers also have a shortlist of franchise-friendly lenders that you can use.

Franchisor finance

Financing is typically a significant barrier for first-time franchisees. That’s why some franchisors offer lending services in-house. They can help launch franchises and expand operations. The financing can be for equipment, inventory, or new systems.

If you need assistance navigating franchise financial resources, book a consultation with Fusion Franchising.