As you ponder how to pay for it, there are several sources of funding that you may want to look into:
- Home Equity: If you own enough of your home and feel confident about your business decision, you can take a second mortgage or set up a line of credit with your lender. You will not need a business plan for this type of financing so this method can often be the simplest route to business ownership.
- Small Business Administration Financing: SBA backed loans can be a great source of funding especially for those who may not quality for traditional financing sources.
- Traditional: This is where you go to a bank and get the money. You will need a pretty good credit rating, a solid business plan and some on-hand liquid capital. However, the rates can be very competitive if you meet all of the criteria and your franchisor might even help with your business plan.
- IRA Money: You can roll your IRA money into a business loan. The advantage is that no penalties are associated with this conversion and you will not need a business plan or good credit because it’s your money.
- Franchisor Programs: Some franchisors offer in-house financing or have established partnerships with lending companies. Because the lending company has confidence in the concept, it can be easier to get a loan.
You can also borrow money from family and friends. If you have built up good credit, you might even be able to get a loan online or quality for an unsecured business credit line.
The point is that there are several alternatives to franchise financing. Find the one that works best for you.