Financing Your Franchise Business
Fast approvals and easy funding for your Franchise.
Operating a franchise business can be challenging enough without worrying about how you are going to finance it. Franchises are a great way to set up a business with the support of professionals. Opening a company this way allows you to utilize a proven idea that comes along with a support structure, marketing team, and often a great brand presence. Most Franchisors help you with your day to day operations to run an efficient and profitable business. Where they fall short is in helping with funding options when there is a need. Below you will find the 3 best options for funding your franchise business.
Finance A Franchise
MRKT Capital works with franchise companies(franchisors) to help them finance franchisees. Franchisees often need additional working capital when there is a need for upgrades, renovations, purchasing new equipment, or opening a new location. When time is limited and you need a quick answer, MRKT Capital can help you Finance A Franchise Today.
Top Reasons for Franchise Funding
- Renovations - Upgrades and Retrofits. Franchisors will always want you to keep your facility as up to date as possible.
- New Equipment - This may be purchasing a new oven for a franchise restaurant or new trampolines for a trampoline park. It's important to keep your equipment operating at 100% and sometimes it's easier to buy new than fix what you have depending on the type of business.
- Working Capital - Sometimes you just need a little extra cash to get through a slow season, cover payroll, or even pay rent and other expenses if your capital is tied up elsewhere.
- Inventory - If you are in a product focused business then you will need products to sell. If a new product is coming out you may want to purchase extra to make sure you are fully stocked.
Franchise Funding Options
When it comes to additional working capital there are a number of different Franchise Funding Options. Depending on time in business, cash flow, and profitability your Franchise Loan Options will vary. Based on our experience working in this space we have found there to be 3 main options for funding a franchise regardless whether or not you are a new or existing company.
Term Loans - A term loan is based off of your credit and cash flow. The key to being approved for a term loan depends on your ability to pay it back over time. This is also referred to as Debt Coverage. A term loan is a great option to an existing franchisor looking for Franchise Loans. This gives the entrepreneur an opportunity to obtain a lump sum all at once and pay it back over time. A great option for funding renovations, purchasing new equipment, buying inventory, or even purchasing a 2nd or 3rd location.
Term loans are available for $25,000-$1,000,000 and the term loan rates will vary from 7%-17% depending on the size of the loan, length of payback and the borrowers credit and cash flow situation.
Cash Advances - If you need a Franchise Loan quickly, a Cash Advance is a great option for you. You can receive funding in as little as 24 hours to cover payroll, fix equipment, renovate or even purchase a new store. Cash advances are based off of your ability to pay back a loan over a shorter term than a Term Loan. Cash Advances typically go out 8-12 months for repayment. Because of their quick funding nature they are also a little more expensive than a Term Loan will be. Cash advances are also available if there are already other loans outstanding in the business which is great for those who may already have a term loan, SBA Loan or other secured lenders.
Cash Advances are available for $10,000 - $500,000 and Cash Advance Costs range from 10-25% depending on the dollar amount and payback period.
Start Up Loans - Finding a business loan for funding a franchise can be the most challenging. Since there are typically no assets or cash flow to lend against it is hard for a lender to commit. There are a few options for funding a start up franchise business. If you have personal credit above 650 and a pretty clean credit history you can borrow up to $100,000 with a business loan. Interestingly enough these loans are typically low interest and have a longer payback period. Interesting how a start up with great credit can get such a favorable loan, right?! The 2nd option available to Start Up Franchise Funding is taking out an SBA Loan. This process can take 1-3 months and requires a pretty involved application process. If you need more than $100,000 than this may be your best option.