Why SBA Loans are not Always the Best Option for Funding a Franchise
Many potential franchise buyers believe that SBA loans are the best option for funding a franchise business, but that’s not entirely true says Eric Schechterman, chief development officer at Benetrends Financial. Schechterman advises that potential franchise buyers should weigh all their options and start the process early in order to find the best funding solution. Here, Schechterman offers insights on funding franchise businesses and gives us a behind-the-scenes look Benetrends Financial and how it has earned its reputation as a leader in franchise funding.
FW: What’s important to know about funding a franchise?
ES: SBA loans are often the first thing that comes to mind for funding a franchise business. While the SBA program can be a great choice, it is not the only one. Most times, SBA loans may not be the best when compared to interest rates on other loans, retirement funds, etc. Plus, many people don’t fully understand that with most SBA loans, they will need to inject 20%-30% of their own money for the project, and they will also need to use their home as collateral for the loan.
The best advice is to look at lending like looking at a franchise. What may seem like the right opportunity at first may not always be the best option. The best plan is to educate yourself on all of the options and look at them strategically, not just in name or perceptions.
FW: How can potential franchise buyers prepare themselves for the funding process?
ES: When it comes to funding a franchise, you should assess your options early in the franchise search process. Get engaged with a funding partner as soon as possible. At Benetrends, we offer free prequalification, funding calculators, education at all stages to make sure that when franchise buyers are getting to the final stages of their discovery process, funding is already in place. Have a plan of attack. You do not want to go on your own or wait until the final steps to engage with a funding partner.
At Benetrends, we have built our business on supporting franchise buyers, franchise consultants, and franchisors with tools that streamline the funding process. Our tactics help avoid hurdles and time delays.
FW: Are all funding options the same?
ES: Similar to franchises, not all funding options are the same. For example, sometimes a business that will allow you to achieve your goals may not be the one you initially investigated. Funding a franchise is similar. Potential franchise buyers should go in with an open mind and investigate all options and identify the ones that will put them on the best path.
FW: How does Benetrends Financial fit in to the franchise funding space?
ES: Not only is Benetrends the oldest and largest funding provider in the franchise space, but we are also the original company that created the option to use retirement funds for a business without tax or penalty. We have helped thousands of small business owners open their doors. For almost 40 years, our Rainmaker Plan has supported franchisees and the need for lending in both good times as well as in challenging times when other lending options were not available. We have supported the franchise world in creating access to pretax liquid. Benetrends founder Len Fischer, the original architect of the rollover funding strategy, has positioned Benetrends to be a respected leader in funding. We have funded more than 20,000 entrepreneurs and employ over 100 employees at our corporate office.
We are known as the company that “wrote the book on rollover funding.” True to that name, we now officially wrote the book on rollover funding. Len Fischer recently released his book “Make it Rain,” which immediately became a best-seller on Amazon.
The History of Benetrends Financial
Benetrends started in the early 1980s when Fischer began working on the creation of the rollover funding strategy. Benetrends was the first to design this strategy and bring it to the franchise world.
Since then, Benetrends has grown to more than 100 employees made up of funding coaches, compliance specialists, retirement plan specialists, actuaries, entity creation consultants, partnership managers, etc.
Benetrends is the selected funding provider that supports the International Franchise Association in educating its members on funding.