Connect with us


How To Acquire Capital For A Franchise Purchase: 7 Smart Tips

How To Acquire Capital For A Franchise Purchase: 7 Smart Tips

When choosing your favorite franchise, you need to make sure you have enough capital not just to purchase it, but to give it the best chance at succeeding. Prices vary widely between franchisors (and some franchisors may even be willing to negotiate), but many of the costs will typically come from new liabilities that stem from running the business. When tapping into your finances for the big buy, these tips can help you locate the necessary capital and win new loans so you can start the business on strong footing.

How To Acquire Capital For A Franchise Purchase: 7 Smart Tips

1. Use Cash to Generate Capital:

No matter what type of debt you rely on, you still need to put down some of your own cash. Ideally, you would be able to pay for all primary franchise costs with cash you already have in the bank, but you will probably need to depend on at least some debts. However, expect to support around 20 percent of so of the franchise startup costs with your own money. This includes those smaller fees that are easier to pay with cash and the money you may have to put down in order to qualify for a business loan.

Also, a reliable supply of cash to pay your expenses before the business is profitable will make lenders more willing to work with you. The more cash you have, the more easily you can make it work to generate additional capital.

2. Focus on Easy Credit First:

Reach for the quick, reliable types of credit already at your fingertips. A home equity line of credit, for example, is an excellent source of franchise funds, particularly if you are already using one. If your credit is especially good, then seek out a full mortgage, since this type of personal collateral is generally more reliable than aiming for a more difficult business loan.

3. Ask Your Franchisor for More Info:

Talk to your franchisor openly about your financing and ask them about any aid they could offer. Many franchisors, especially the larger brands, offering some type of financing of their own, programs that you can enter to pay for some of the key costs. These programs are often easier to qualify for than alternative loan options, but that does not mean their terms are better. Compare franchisor options to your other sources of capital before making a decision.

4. Impress Commercial Banks with a Good Franchise Choice:

Commercial banks remain one of the most common sources of franchise capital. However, banks will closely examine your franchise choice, including its current state and full financial history. Banks love to see a strong, stable franchise with plenty of future prospects. Before you apply, do your own due diligence on the franchise. Study its financial statements, history and current industry situation. By picking the most solvent franchise you can find, you will increase your chances of getting a commercial loan.

5. Get Your Loan Package Ready:

Even though you are buying a franchise, you still need to do plenty of preparation yourself. Get all your own financial documents ready, including your tax returns and bank account documents. Develop your own business plan that shows exactly what you want to do with the start-up and its projected costs.

6. Study SBA Loans:

Small Business Administration loans help entrepreneurs start their own companies, but you can also qualify for them if you are purchasing a franchise. These loans may be a better alternative to tougher commercial loans.

7. Seek Alternative Loans for Your Specific Situation:

Investigate local and national programs designed to help out new business owners. If you are a veteran, look into subsidized business loans directed to veterans. If you belong to a minority, search for related loans and grants to get started. Investigate any current state programs that offer high-quality loans to encourage business in your area. Some programs even help convert retirement funds, like a 401K into cash for investment purposes.

While any choice you make to raise capital has to be carefully considered with respect to your own financial circumstances, there are many options out there to help a would be entrepreneur get his or her business off the ground.

Andrew Ewing is a professional blogger that shares tips and advice about franchising topics. He writes for, a leading franchise directory.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Recent Posts

Business2 days ago

Why Is Quantity Surveying Essential in Construction Industry

Quantity surveying is an essential part of the Australian construction industry. It is the process of calculating and estimating the...

Home Improvement4 days ago

How to Maintain Upholstered Furniture

No matter if you have pets or kids, maintaining your upholstered furniture is quite a challenge. Even though vacuuming it...

Business1 week ago

How Do I Find a Good Developer?

Finding a good bubble developer to help build your app or digital product can seem challenging. How can you choose...

Home Improvement2 weeks ago

When is a right time for home repairs?

Summer is a popular time for a renovation around the globe. While it is true that bright days and warm...

Top Alteryx Competitors Top Alteryx Competitors
Tech3 weeks ago

Top 15 Alteryx Competitors

The world has seen a tremendous rise in startups and new incorporations in the business world. Companies have great potential...

Lifestyle1 month ago

Latest Wedding Trends for 2023

If you’re planning on getting married this year, chances are you’re probably overwhelmed and confused when it comes to wedding...

Lifestyle1 month ago

Tips To Make The Most Of Your City Break In London!

London is one of the best cities in the world, known for its quintessentially British culture, great nightlife, fantastic museums...

General1 month ago

The Ultimate Guide To Packing For A Trip To London

London is one of the best cities in the world, known for it’s rich history, quintessentially British culture, the best...

Tech2 months ago

Top 15 Web Development IDEs

The web development field has seen sustainable growth throughout the years. As technology is advancing, so is the web development...

devops devops
Tech2 months ago

12 Key DevOps Programming Languages to Still Popular in 2022

“DevOps is not a goal, but a never-ending process of continual improvement.” – Jez Humble Delivering the finest of services...

Entertainment2 months ago

Festival Fashion Style Tips For 2022

Summer is well and truly here and with that comes the festival season! From the biggest stars performing on stage...

Green & Energy2 months ago

4 Tips For Making Your Wardrobe More Sustainable

Everyone is trying to make more of an effort to make their wardrobe more sustainable, but often are unsure where...

General3 months ago

7 tips on how to organize a budget-friendly move

If you are planning a move any time soon, you might be worried about all the expenses that wait for...

Metal Roof Colors Metal Roof Colors
Home Improvement3 months ago

Metal Roof Colors: How to Select the Best Color for a New Roof

Choosing the right type of material for your roof is enough of a hassle already that the question of choosing...

Health3 months ago

Simple Ways To Feel More Confident At The Gym

If you are new to the gym, or you haven’t been in a while, sometimes you might not feel completely...