Franchise Business – How To Get Loans

People who are contemplating to start a franchise business often start by looking at track records of existing ones to gauge which have been around for a while and are thus believed to be operationally sustainable. Although this is a key step in choosing a franchise business, it should not be the first one.

With today’s volatile economic condition, the first step is to come up with a good financial plan before even looking at the choices of available franchises. If you are uncertain about how and where to secure funds for your potential business, the following resources may be useful:

Patriot Express Program

The Patriot Express is a lending program administered by the Small Business Administration or SBA. The program is geared towards:

- Active duty military personnel who are about to retire

- Veterans

- Those in the National Guard

- Those who are married to persons in the military

Under the Patriot Express program, borrowers may borrow up to $500,000. Although the SBA does not provide this loan to applicants, many lender participants are eager to offer this loan because the SBA guarantees 75 to 85 percent of the loan. This means there are considerably fewer risks shouldered by the lending agency and so they are much friendlier to potential borrowers. It is also easier to qualify as the credit score required for it is not set so high.

The program also carries comparably low loan rates. Loans that are payable in seven years or less, charge only as high as 2.25%. Loans payable in longer terms carry only a maximum interest of 2.75%.

Qualifying for this loan means meeting certain criteria for eligibility, which include the following:

- Business size

- How the loan will be spent

- Type of business

- Other ways to get funding

The VetFran Initiative

The Veterans Transition Franchise Initiative or VetFran was initiated by the International Franchise Association (IFA) to help military veterans. The IFA partners with more than 350 franchise corporations and encourages veterans to go into franchising by extending financial incentives. The program itself does not offer funding, but the IFA’s franchise partners do provide financing or help applicants choose the right lending program.

Franchise Funding Specialists

These specialists primarily help you come up with the best financing strategy for your franchise business. All they need is some information about yourself and your plans, and they do the rest.

It’s advisable to consult such specialists, as they know how franchising goes inside and out. They also have a wide network of colleagues in the industry, so you’ll be saving lots of time and stress.

It is also wise to use the help of specialists because you do not actually have to pay them until you receive the loan that they helped you secure. Even before that, they can already assist you with fund sourcing and getting a grip of the figures that you will be working with.

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