When considering franchise ownership, few activities will have as much of a long-term impact on your business as obtaining adequate financing.
Before opening your location, climbing in a truck or starting sales calls, you will already have expenses due, and adequate funds may mean the difference between success and failure.
Those expenses, such as a lease or loan payment, marketing materials, inventory, and your personal expenses are due before you begin collecting revenue, which is why your business plan should include extensive analysis and accounting of these expenses, along with expected revenue growth.
The Franchise Disclosure Document (FDD), along with your validation calls with existing franchisees, should provide a good benchmark to help you document and plan for these expenses. Cash is king in a new business, and it is advisable to over-capitalize to account for unforeseen issues rather than find yourself struggling after being open a short time. Discussing financing options with your funding specialist at FranFund can identify these potential cash coverage issues.
An SBA Loan Can Be a Valuable Tool to Provide Access to the Capital You Need to Get Started.
With all of the recent news coverage about the funding legislation created to keep the country afloat during the unprecedented COVID-19 crisis (Paycheck Protection Program and disaster relief funds), you may have concluded that the requirements for obtaining an SBA (Small Business Administration) loan have been relaxed or reduced.
Unfortunately, this is not the case. The four main qualifiers for a loan remain the same:
It is important to remember that the SBA does not make loans, but rather guarantees a portion of the loan to a bank or credit union to incentivize that lender to grant a higher risk loan.
SBA Debt Relief – Great News if You Can Get Your Loan Closed in Time
Along with the PPP program, disaster relief funding, and the rest of their coronavirus debt relief efforts, the SBA has also announced a loan payment assistance program.
If your business already has an SBA loan in place, with the first payment due after March 27th, 2020, OR you are a new borrower and can close your SBA loan and be in a regular loan servicing on or before September 27th, 2020, the SBA has committed to making your first six payments.
For new businesses that do not yet have an SBA loan, you will need to hustle to beat the September 27th deadline; it is imperative to remember your loan must be closed and fully disbursed, not just approved, by this date. If your loan includes any construction and/or large equipment purchases, this means both must be complete and fully paid.
If you are considering business ownership and intend to take advantage of the six-month payment relief, make sure you understand what it will take to get your loan closed promptly. You can read more details and download a checklist at franfund.com/blog/getting-your-sba-loan-funded.
Recognized as a #1 franchise funding supplier by Entrepreneur, FranFund designs smart all-in-one funding plans that grow with your franchise. No matter where you are in your journey of business ownership – whether you are considering leaving your current job to start a new venture or if you are looking to expand your existing operation – we are here to help. Founded by a veteran in the franchise industry with first-hand experience as a franchise owner, franchise developer, and new franchise creator, FranFund specializes in funding solutions for franchisees.
To schedule your complimentary consultation with our funding experts to determine the best strategy to get the capital you need, visit franfund.com/schedule-consult.