The franchising industry is highly competitive and due to tight lending criteria, many franchise businesses are not having access to the money they need. As strict credit guidelines continue to plague the expansion of small businesses, lending experts say that money is for those with “Good Character, Credit, Cash, and Collateral.” Merchant Advisors doesn’t comply with their philosophy. Whether you are a multi-unit, a single location seeking expansion or simply wants to take your business to the next level, Merchant Advisors can help. We offer franchise loans so that you can make equipment purchases, carry out mandatory repairs and upgrades with ease.
$10,000 - $5 million
In a week
6 months to 10 years
Prepare for a Franchise Loan
Application with us!
Just like every other task in life, filling a loan application requires some homework as well. Before filling out a loan application, you’ll need to prepare yourself and have some paperwork ready. Here’s a list of factors that require your attention:
Your personal credit score is the most important factor for any lender that finances your franchise. This is because lenders want some proof of your reliability as a borrower before lending money. And this is where your personal credit score authenticates your credibility. If you pay your personal debts responsibly, they assume you’ll be responsible with your business debts, too. Plus, if you want to secure better funding options you must improve your personal credit score.
Before starting your loan application process, have a ‘financial file’ ready. Organize your personal financial statement, balance sheet, income statement, and business tax return documents. Organizing your financial information demonstrates how well you manage your finances.
Mainly the lenders will focus on your balance sheet, to give them an idea of your pending debt and current assets. All of your loans and mortgages should be vividly mentioned in your balance sheet. In addition to this, income statements will let lenders assess your current income flow and how you deal with it.
A thorough business plan is a critical factor in your franchise loan application. After preparing for a personal credit score and financial information, you’ll need to create a strategic business plan. Your strategic business plan should include your business revenue projections, working capital assessment, and cost analyses, marketing plan, and an expression of your abilities as a business owner. Having a strategic business plan will help you identify your potential weakness and the funds from the loan can help cover them and fill the financial gaps.
Share your business history, previous loan record, and insides and outsides of your business. If all of your financial records are well-organized and credible, you can secure the loan easily. A clean history and financial track record can go a long way.
Various ways to Utilize Franchise Loans
Franchise loans can be used in multiple ways, such as:
- Use the funds to open another franchise and enrich your business.
- Funds from Franchise Loans can help you cover the franchise fees.
- This cash can help you market and advertise your business on various platforms and channels.
- Pay for the required and necessary upgrades and remodeling.
Types Of Franchise Fees Involved
Opening another franchise isn’t a piece of cake, multiple fees need to be covered. Franchise loan can help you with the additional cost but first, you have to understand the types of fee. We have broken down franchise fees in the following categories:
Basically, you pay the initial franchise fee to enter the franchise industry allowing you to use their products and services. You will have access to their promotional material. Initial training fee and cost to access to their hardware and software are covered as well. The procedure and the characteristics of this fee might vary from lender to lender.
Once you have paid the initial fee and your business is up and running at the other location, get ready to pay the ongoing fee. It can be an intermittent fee or a percentage of the franchisee’s gross revenue. The ongoing franchise fee can vary from company to company, but on average, it can be around 5 - 6% of the franchise sales volume.
In order to cover the cost of running operations and the remarkable support showed by the franchisors, you pay a Royalty fee. Usually, this fee is calculated as some percentage of a weekly and a monthly gross. You are obligated to pay these fees until the end of your franchise financing agreement.
Most franchises require participation in a common advertising fund from franchisees. This is usually a fixed contribution, but can also be a percentage of the franchisee’s gross revenue. The cash form this fee will cover the cost of additional contributions, yellow pages and to fulfill other domain requirements.
Franchise Disclosure Document has contained all the relevant information about the additional fee. You have to pay an additional renewal fee if your franchise contract is exceeding its original terms.
A transfer fee is imposed if you sell your franchise to another party.
Keep all the initial, ongoing and additional fees in mind and compare the cost of applying as an independent franchise operator to the complete cost of a Franchise loan. Select the one that goes well with your business needs and financial resources.
How can I improve my chances of
approval for a Franchise Loan?
Since franchise financing is a very competitive industry and to amplify your odds of securing a Franchise Loan, we have listed some pointers below:
Offering collateral will instill some confidence in the lender. You will be approved for an SBA loan or a bank loan with much more ease if you offer them some collateral. For example, the equipment financed through Equipment Financing will itself act as collateral.
It is advised to present as many personal resources as possible so that your lender can applaud your dedication. This shows your commitment to your business and highlights your interest in franchise financing.
Franchise Disclosure Document (FDD) gives a detailed overview of franchises. From fee information to Franchisee’s rights and obligation, every related aspect is covered. Read the fine print carefully before applying for Franchise Financing.
It is recommended to opt for a franchise keeping its brand value, location and history in mind. Pay a visit to the lender after you have picked a franchise.
Qualification Criteria for
Eligibility criteria for Franchise financing and loan is relaxed giving an equal opportunity to business owners with weak financial history.
More than 6 months
At least $120,000
Good, fair and poor – all are
Benefits of Merchant Advisors’
Merchant Advisors understands that business owners have a lot on their plates from meeting commitments to running their small businesses. Juggling these tasks efficiently requires extra capital which can be a cumbersome process. With Merchant Advisors, you can get that extra capital in the form of franchise financing with cash up to $500,000 completely unsecured!
Merchant Advisors has helped many successful businesses through affordable franchise loans, you can be the next. Here are some of our benefits of franchise loans to convince you:
- 90% of loan approval rates
- Flexible financing plans up to $1 million
- Fixed low-monthly payments
- 24-hour franchise loan approval
- The easy application loan process
- Dedicated advisors to franchise brands
- Flexible terms for acquisitions & remodels
- Competitive interest rates
- Master lines for Multiple Store Owners
- Possible tax deduction
Some of our satisfied Clients
We have provided franchise financing to many renowned businesses including:
Merchant Advisors understands that business owners have a lot on their plates from meeting commitments to running their small businesses. Juggling these tasks efficiently rNow you know the do’s and don’ts of the Franchise Financing and have a franchise in mind, you should start filling out a loan application. Whether you pick a franchisor or go with alternative funding, be sure that you have all the required documents to offer your lender. Pay close attention to financial assets and improve your credit score to increase your chances of loan approval.
Moreover, most of our Franchise clients have recommended to apply for Merchant Cash Advance, Business Line of Credit and Working Capital Loans. Any of these options can help you cover the mandatory costs, such as payroll of new employees, advertising campaigns, equipment financing, and inventory purchases. All these expenses can be met without disrupting the cash flow. Assess your financial needs and approach the funding option accordingly.
equires extra capital which can be a cumbersome process. With Merchant Advisors, you can get that extra capital in the form of franchise financing with cash up to $500,000 completely unsecured!