Franchise Financing – The First Steps
Most prospective franchisees must borrow money in order to purchase and start up a franchise operation. But today’s lending environment is tough. With so many lenders affected by the mortgage default debacle now dragging down world economy lenders are tightening up on loan approvals.
You need three things before you actually approach lenders to get financing for a franchise: a good credit report, a sound business plan, and some cash of your own. Most prospective business buyers are expected to come up with anywhere from 15 to 30 percent of the estimated cost of buying and starting up a business. People often rely on accumulated savings, home equity, or the generosity of family and friends to come up with that initial portion of the cost. What sources can you avail of to help you finance your franchise operation?
And last, but not least, always have your accountant and lawyer review any finance packages and terms.
