One of the most flexible companies when it comes to franchise financing just added to its list of funding options.
Business Finance Depot, which is headquartered in Mount Dora, FL, now offers the Small Business Administration (SBA) 7(a) loans, for up to $5 million.
Most financing providers are able to offer this common small business loan, but Business Finance Depot owner Paul Bosley says his organization is able to offer it with a slight twist.
Because of the specific lenders Business Finance Depot works with, the organization is able to offer lower down payments and accept people with lower credit scores for the 7(a) loans than a typical lender.
“We’ve evolved,” Bosley said during a recent interview. “We’ve taken on this other financing product and we’re working with some very special lenders to offer the 7(a) loan.”
Prior to being able to offer the standard SBA 7(a) loan, Business Finance Depot specialized in packaging equipment leasing together with the SBA Working Capital Loan. Now that it can provide businesses with either the 7(a) loan or the leasing and Working Capital Loan option, the organization has financing alternatives for any franchise.
“We can pretty much do anything franchisors need for financing,” Bosley noted. “We can do it all. There’s very few companies that can do what we do.”
A Good Year
This past year has been a good one for his company, Bosley outlined. It has continued to work with United Franchise Group’s stable of brands; including Signarama, Experimac, Fully Promoted, John Smith Subs, and Venture X. In addition to that, Business Finance Depot has started working with the international fitness franchise, F45.
F45, which recently decided to enter the United States market, chose to work with Business Finance Depot because they liked the packaging of the equipment leasing with the SBA Working Capital Loan, something that is unique to Bosley’s company.
Business Finance Depot has seen significant growth over the past year thanks to its work with franchisors, Bosley noted. Thanks to the fact that it can now offer the SBA 7(a) loan, it has picked up more franchising clients recently.
From Fitness to Franchises
Around since 2006, Business Finance Depot originally started out just financing fitness centers, but now primarily does business with all types of franchises. A lean operation, Bosley’s organization has an administrative staff and four active full-time agents who sell their financing products.
Seven years ago Bosley volunteered to be a counselor for SCORE, a division of the Small Business Association of the federal government, which provides mentorship to new entrepreneurs. It was through that volunteer service that he met many SBA lenders, one of whom asked if he would be interested in packaging SBA loans for new entrepreneurs.
That led to him connecting with a representative of United Franchise Group in 2014, which introduced him to the world of franchising. Now, many different franchisors are using Business Finance Depot’s services.
One such franchise is Yogi Bear’s Jellystone Park, owned by Leisure Systems Inc. Like F45, Yogi Bear’s also appreciated the way Business Finance Depot could package equipment leasing with an SBA Working Capital Loan to make it easier to for a franchise location to finance park improvements. Additionally, the 7(a) loan has already been used to finance the purchase of 2 new Jellystone Parks to add to the number of franchisees of this storied franchise.
“Our niche is to look at a franchise, figure out what equipment they need, and package that equipment into a lease and then give them a Working Capital Loan for $150,000,” Bosley said.
With the SBA’s Working Capital Loan, the business itself is the collateral while the collateral for the equipment lease is the equipment itself.
The equipment lease Business Finance Depot offers usually requires a 10 – 20 percent down payment with the rest of the lease financed over three years. At the end of the lease period the franchisee owns all the equipment. The Working Capital Loan has a 10-year window to repay with an interest rate of seven percent and no early payment penalty. This allows franchisees to repay the loan quickly if they can.
Combining these two financial products lets Business Finance Depot give franchisees about $250,000 worth of equipment and operating funds with about nine or 10 percent interest and no early payment penalties.
With its ability to offer both the equipment leasing and Working Capital Loan package and the SBA 7(a) loan with reduced down payments and ability to accept people with lower credit scores than usual, Business Financing Depot is among the most flexible financing options for franchisors.