Money is the lifeblood of any business. It creates a company and enables it to run. When you decide to launch a franchise, you need to consider how you will get the money to start a franchise.
It’s critical that you secure your finances as soon as possible. You don’t want an opportunity to pass you by due to delays. Some financing options take longer than others to bear fruit. For example, your savings are easier to access than a loan that needs approval.
The type of funding available to you will depend on several factors. These include risk tolerance, credit score, and timeline. You may use a single financing source or a combination of options to raise money to start a franchise.
Where to get money for your franchise
There are several sources of money to start a franchise that you can tap into.
- Most people start with their savings. Personal savings are the most accessible funds you have. If they aren’t enough to buy a franchise, they are critical to determining your success with other lines of credit and financing.
- The Small Business Administration (SBA) has several loans available. The general loan for small businesses is the 7(a) program. It also has special programs for individuals like veterans or those who qualify for disaster recovery, among other programs.
- You can apply for a business loan from the bank or any other financial institution. Your credit score, income, and the strength of your business plan will play a large part in determining your success with a bank loan.
- Some entrepreneurs choose to use their home equity to finance their businesses. This is a quick and expedient way to get money to start a franchise.
- You can use a securities-backed line of credit if you have an investment portfolio.
- Rather than buy your equipment, you can use an equipment lease. You can finance all your equipment, such as machines, vehicles, computers, desks, or anything other equipment you need to start and run your franchise.
- You can tap into your retirement funds like your 401(k), IRA, and 403(b) without paying penalties or upfront taxes. This is also known as Rollover as Business Startups (ROBS) or 401(k)/IRA Rollover Funding. You can also use your retirement fund as capital for an SBA loan.
The franchise industry has a business that can fit almost any level of funding. You can start a franchise with as little as $25k out of pocket, with some ways to get money to start a franchise listed above. To help you determine the level and type of financing that can get your franchise started, contact Fusion Franchising now.