One of the challenges which many would-be franchisers may face is finding the funds to purchase their franchise in the first instance. Although some people will be able to buy their franchise outright, many others will be looking at funding the business through a combination of their own savings and/or redundancy money, plus a business loan of some sort.
Here we take a look at the pros and cons of how to fund a franchise using a bank loan.
How To Get Funding To Open A Franchise
Typically, a bank won’t lend 100% of the franchise purchase cost. Although the amount a bank will lend depends on a number of different variables, the usual amount is around two-thirds of the total cost of the franchise. This means that you will need to have around a third of the franchise cost already available.
Bank loans may be applied for either online or in a branch; you need not necessarily have a bank account with the bank you’re applying to in order to be considered.
Why Are So Many Franchise Owners Successful In Obtaining A Bank Loan?
When considering whether to offer a loan, banks take into consideration the nature of your business, how well worked out your business plan is, what market there is for your products and/or services, how realistic your costings and predicted returns might be, how much marketing you’ve done and how strong your brand might be.
A franchise opportunity scores highly in all these areas. Because a franchise comes with marketing materials, a brand, and plenty of training and support, franchise owners are often in a much stronger position to make a success of the business than if they were going it alone.
Kick Start Your New Career With A Bank Loan
When it comes to how to get funding to start a franchise, a bank loan is a reliable option. The loan will give you the money needed to buy your franchise and begin trading. Over time, you will usually make sufficient profit to repay the loan (plus interest), as well as make an income that may well grow as time goes on.
As your franchise becomes more established, with more customers, it also begins to appreciate in value. This means, should you ever wish to sell it, you may well make a profit on your initial investment.
For many people, a bank loan can be the tool they need to kick start a new, exciting franchise career.
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