How to Choose the Right Financing Option to Meet Your Goals
If you've decided that franchise or business ownership is in your future but you don't have enough available cash, or liquid capital as it is often called, now is a great time to explore your financing options. Learn more about the various types of financing that are available to you.
Some Franchisors Offer Their Own Financing Programs
Some franchisors offer their own in-house financing programs, or they have partnerships with a particular lending company. The lending company is familiar with their concept and convinced of the validity of the brand, therefore it may be easier to gain funding from a partner company. If a franchisor doesn't offer financing and borrowing the money from friends and family is not an option, you can explore the vast range of financing options available to...
You can get a loan from many banks. You must have a good credit rating, some liquidcapital available, and a strong business plan, as banks tend to be conservative in who they award business loans to. With that said, bank interest rates tend to be competitive. Some franchisors will help you prepare your business plan so it reads well and is convincing.
The Small Business Administration (SBA) offers SBA-backed loans. These extremely popular business loans can be obtained by many individuals who do not qualify for traditional financing options.
Investing Your Retirement Funds in a Business
There are several innovative companies that will roll your 401K or other retirement plan into a business loan. There are no penalties associated with this type of retirement fund conversion. This type of loan enables you to invest in a business without mortgaging your home or using your property as collateral.
Home Equity or 2nd Mortgages
If you feel comfortable and confident in your decision to purchase a business and own enough of your home to take out a home equity line of credit or second mortgage, this option can be a simple way to obtain the necessary cash to finance a business. You will not need a business plan to obtain this type of finding.
Other Sources of Non-Traditional Financing
With the popularity of business ownership increasing, there are more and more financing options available to meet your needs and preferences. For example, with solid credit, you may be able to obtain a business loan almost instantly and online. Additionally, there aresmaller private lenders and brokers that can work with you if you'd like more personalized service.