Thousands of Americans each year enter the exciting world of franchising. Becoming a franchise owner offers the independence and financial opportunities of owning a small business, with the benefit of an established brand, plus the support of a larger infrastructure. Yet, owning a franchise requires a significant amount of capital. So, securing franchise financing is one of the critical things to tackle first. 

The Costs of Opening a Franchise 

The exact costs of opening a franchise will vary by franchised brand but many common elements are starting with a significant franchise fee which essentially is a license to operate under the franchise brand name. That fee also usually covers the cost of training, ongoing corporate support, and site selection. In addition, there are legal and accounting fees, costs of building out and equipping a location, signage, and inventory. And every operation requires working capital to handle the expenses of daily operations. Hence the need for franchise financing. 

What Are the Options for Franchise Financing? 

-Financing assistance from the franchisor. Some franchisors offer financing assistance from the corporation itself or a partner financial institution. 

-Commercial bank loans. 

-Small Business Administration (SBA) loans. SBA loans are loans that are backed by the SBA and funded by their lending partners. These loans offer attractive interest rates and repayment terms compared to other types of loans.

 
-Alternative lenders. Alternative lenders can offer shorter turnarounds and less stringent loan requirements compared to other lending sources. 

-Friends and family loans. This approach is used frequently but comes with some family relationship risks. 

-Personal funding. This can come from IRA or 401(k) funds. 

How to Apply for Franchise Financing 

While the exact application process will differ by the financial institution, the requirements will include good personal credit history, personal financial documents, and a well-developed business plan. 

Seek Expert Franchise Financing Assistance 

Contact TCF Capital for a wide range of financing solutions, tailored to your needs to help your dreams come to life.