It’s a common misconception that you have to be cash rich to buy a franchise business. Entrepreneurs from all walks of life are able to buy a franchise through inheritance, redundancy, savings and of course, through finance.
Getting your ‘house’ in order
Obtaining finance is made easier if you have a good credit history and have your business plan ready.
Your credit history is something that you nurture over time. It’s an opportunity to show the banks and lenders that you are creditworthy. I.e. you will pay them back what you owe them.
A good business plan should be a detailed plan of what the investment (money borrowed from the bank) will be used for and how the return on investment will allow you to pay the borrowed sum back.
Fortunately, lenders like franchise models, like ServiceMaster Clean because they tend to be proven and as such, are less of a risk to borrow against.
How much do you need?
It’s a good idea to consider the amount that you’ll need to borrow. There are many things associated with the cost of the franchise that isn’t included in the ‘start up package’.
These typically include, office equipment, vehicles, premises, registrations and insurances. So, it’s important to factor in these costs so that you ask for enough finance to cover all aspects of the business, but to also leave some ‘afloat’ for unexpected costs and cash flow.
What to ask your lender
You should ask your lender about their credit terms, such as amount, duration, fees, rates, covenants and any payment holidays that you might be eligible for.
Sources of funding
Most major banks, including Lloyds, Barclays, HSBC, NatWest to name just a few, support the financing of franchise businesses. There are also some specialist lenders that will also lend to those with a good credit history and a strong business plan.
Finance can certainly open doors for those individuals who are looking at franchise opportunities without the full investment amount. Speak to your high-street bank or a franchise finance lender for further information.