How SBA Programs Help Buyers Launch and Scale Businesses
Choosing how to fund a franchise is a big, life-changing decision — and one that sparks a lot of questions. Franchise consultants hear many of the same ones from candidates. Husband-and-wife team Dan Pace and Cindy Watson, co-founders of First Financial, share answers to some of the most frequently asked questions below. Their company specializes in flexible, creative funding solutions designed to help new franchisees get started, grow, and reach their goals.
1. What financing options do you offer for first-time franchise owners?
The best option for first-time franchise owners is an SBA loan. An SBA loan requires a minimal cash outlay to acquire a significant amount of working capital. It has a 10-year term, an excellent rate of Prime plus 2.75%, and doesn’t require alien on personal collateral if the loan amount is under $350,000. Utilizing an SBA loan first doesn’t put your retirement funds at risk, keeping them available for emergency use or to fund a second location during those first few years while your first location matures.
2. Can you pre-qualify my candidates before they start the franchise process?
Yes, absolutely! Like buying a house, we can prequalify them for a loan amount so they can shop for a franchise that suits both their interests and budget.
3. How fast can you typically get a candidate funded once they choose a franchise?
The fastest we’ve funded an SBA loan was five days for a Gotcha Covered franchise. So the short answer is: very fast! The full answer depends heavily on the borrower, their preparedness, and the franchise they are buying. The faster a client provides the required documentation, the quicker we can fund. If a client is slow or unresponsive, it will add weeks to the closing date. In those cases, we keep the franchisor and consultant abreast of the situation and may request assistance getting the client across the finish line. Our SOHO (Small Office Home Office) $150,000 loans typically fund in less than 30 days.
4. Do you offer SBA loans, and how do you help candidates through that process?
Yes, we help them from start to funding. The SBA is all about compliance, which First Financial stays educated on, and we guide the client through the process. We provide templates for the business plan, pro forma, and financial projections, and we make corrections to ensure the loan is in compliance.
5. What are the most common reasons candidates get denied financing — and how can we avoid that?
The most common reasons for denial are poor credit history, insufficient cash on hand, nondisclosure of material information, or failure to follow our guidance. We provide a list of actions that should be avoided after a loan is initially approved. Applying for a credit card, buying a car, or filing for divorce are all material events that can result in a financing denial. After initial approval, clients should avoid taking any action that changes their credit score or financial position.
6. Can you help candidates use 401(k) or IRA funds without penalties or taxes?
Anytime you are working with a tax-deferred instrument such as a 401(k), you should consult your accountant, tax advisor, or other financial professional. Converting a 401(k) balance into a funding source is not our area of expertise, but we have partnerships with both franchise-focused CPAs and firms that specialize in the use of retirement funds. We’re happy to discuss the risks, benefits, rules, and ongoing requirements of all financing options so your clients can make an informed choice.
7. How do you support candidates after they get funded?
Throughout the funding process, we educate your clients on future financing options and provide useful resources. Each client receives an introduction to My Franchise CPAs, a full-service firm that specializes in franchises. They assist with everything from entity setup to tax filings and strategies that can save franchisees tens of thousands of dollars. We also periodically check in with past clients to see if they need financing for a second location or short-term working capital. If your client is ready to exit their franchise, we can assist with a cash flow analysis and recommended sale price.
8. Can you help multi-unit franchisees or those looking to expand later on?
Multi-unit deals require more seasoned borrowers with significant financial resources. For successful franchisees looking to expand, an SBA loan can be the perfect tool for acquiring new territories. In either case, our team of financial experts is ready to help your clients find the financing they need.
9. Do you have relationships with specific franchise brands or industries?
Yes, we work closely with some of the largest players in the industry, including Neighborly, HFC, and Premium Service Brands.
10. How can working with you help me close deals faster and smoother?
We are SBA experts. We know the process and what it takes to move a loan through quickly and easily. We educate your client and help prepare their loan materials. Simply put, we navigate the process so they don’t get stuck or lose valuable time. This means more closed deals and happy clients! Check out our 800+ 5-star Google reviews!
Learn more about First Financial.
