How To Find A Loan For A Franchise Business Opportunity

2 Jul, 2009  No Comment

Candice Clem asked:


Of the dozen difficult aspects of selecting, starting, and running a new franchise opportunity, few are as potentially paralyzing as paying for it. Most of us have learned that money doesn’t grow on trees, and the average franchisee-to-be simply doesn’t have the cold, hard resources to make a business purchase outright. Whether the goal is a Sterling Optical costing no less than $100,000 or a Baymont Inn at $1mil, the staggering line of zeroes at the end of the prices on those business opportunities can sometimes be enough to discourage even a veteran entrepreneur.

So what does the earnest and talented entrepreneur with a skinny wallet do? The same thing I did to make my way through college: take out a loan. The problem many people run into, though, is that loans aren’t always available to everyone-or at least they don’t seem like it.

If you’ve got good credit and enough assets, it shouldn’t be too hard to approach a bank or lending institution, even through your franchisor, and get the sufficient funding to start your franchise. There are even lenders you can approach via the internet to get that startup loan that you’re looking for-Diamond Financial and Triple-AAA Financial Service are two great options. But, in our dwindling economy with skyrocketing interest rates, if your credit is even slightly off or you aren’t a homeowner with assets to leverage, chances are you’re going to find yourself pacing, biting your nails, and losing precious hours of sleep over whether your financing is going to come through or not. There are alternatives to needless worry, however. Aside from the option of finding a partner, investors, or someone in your family who has the cash to cosign the deal with you, there is an alternative that has proven effective for a good number of franchisees hoping for their own franchise opportunities. That alternative is the US government.

Yes, you read that right; the United States government can actually help you. Though they may be tapping your phone and reading your email as we speak, they are genuinely concerned with getting more small businesses-franchises included-up and running, because that is what capitalism, and thus our nation, thrives on. The department you’re looking for in this instance is the Small Business Administration (SBA), and they really can get you the money that you’re looking for. The way it works is this: when a person interested in a small business franchise can’t get a loan from a private lender for whatever reason, the SBA is able to step in and provide a guaranty to the lender as high as $2mil, making a loan possible by taking the responsibility for a potential business-and thus loan-repayment-failure off the franchisee’s shoulders.

There are, of course, some hoops for the potential franchise buyer to jump through in order to get that SBA loan, but the rules of engagement are a little different with the SBA than they are with private lenders. Banks and other financial institutions tend to look more at credit and assets than anything else, because in our fading economy, their responsibility is keeping their hands on dollars whether the loan recipient succeeds or not-sounds cold, but we can’t blame them. The SBA, however, is far more interested in the business model and the professional chops of the candidate; if they think that this guy with this work from home business plan can make it, he gets the guaranty. Their concern is not keeping their hands on dollars today, but getting functional businesses up and going to pump more dollars into the national economy tomorrow.

As a side note, because the SBA is interested in functional business plans, they also already have a record of franchisors registered with them, having already provided and cleared their business models with the SBA, who agrees that their plans and practices are lucrative and clean. This is a good resource in determining what franchise to purchase as well as figuring out if it will be affordable for you.

Though getting a loan can seem like a hopeless endeavor, there are very real and very effective ways to get it done, without having to leverage your car and sell the shirt off your back-after all, no one is going to be comfortable coming into the SIGNARAMA owned by that creepy shirtless guy. Your franchisor and the Small Business Administration can help when things look really dire. And when you’ve passed through the trial and learn how it feels to both flounder and fly when it comes to financing a franchise business, you can always go into business helping others to accomplish what you have. Exclusive Commercial Lending and IRA and 401(k) Retirement Plan Rollover are two companies that allow you to do just that: make other people’s business dreams a reality.



Mick

How to Avoid Small Business Financing Mistakes

1 Jul, 2009  Comments are off

business financing
Stephen Bush asked:


Commercial loan mistakes can have severe financial consequences. However, with proper time and effort, the business finance problems described in this article can be overcome successfully.

Unanticipated business financing mistakes are often difficult to avoid because they involve complications that are not easily understood by many commercial borrowers. There is often a tendency for borrowers to ignore or overlook factors that can produce long-term financial problems with complicated commercial loan situations.

What benefits will you realize when you avoid a common business financing mistake? Commercial borrowers should expect to avoid potentially devastating business finance problems and secure improved commercial loan terms by taking some extra time and caution when they are obtaining a new business loan or commercial mortgage. The stakes are high and this will admittedly require a concerted effort by business owners in order to successfully avoid commercial financing mistakes.

This report will address two approaches for avoiding mistakes with business financing. Both are considered to be of somewhat equal importance, so it is strongly suggested that business owners devote time to both approaches.

You should make an initial evaluation of the need for long-term or short-term business financing. It is essential to consider all possibilities before you commit to a commercial loan. With a long-term business loan, borrowers are likely to incur substantial penalties if they need to refinance in the first three to five years. With short-term business finance agreements, business owners could be faced with the need to obtain new financing that will replace an existing loan at an inopportune time.

The biggest potential mistake could occur if a borrower is not aware of the terms in their commercial financing. Even though a commercial borrower might have what appears to be a long-term commercial mortgage, many traditional lenders include recall terms that allow the lender to require early repayment of the commercial real estate financing under specified conditions. Lack of knowledge about such loan terms can prove to be a serious mistake. Here is a recommended solution to help avoid this specific problem and other related problems: Commercial borrowers should look for resources which will provide relevant solutions for a business owner contemplating business purchase or real estate refinancing.

Working with an experienced business finance lender and advisor is an absolute must. Following such advice will not be as easy as you probably imagine due to the recent chaos in the residential real estate mortgage field. This unexpected financial turmoil has resulted in an increasing number of residential brokers and lenders seeking to become active in the business financing field. What this means is that there are now substantially more inexperienced financial advisors attempting to advise business owners about how to obtain a commercial mortgage or commercial loan.

Obviously there is a high probability of serious mistakes occurring if an inexperienced loan advisor is used, and these mistakes are unfortunately likely to be of a critical nature because of specialized business loan requirements. Here is a suggested solution: Business borrowers should thoroughly discuss financing alternatives with a commercial financing expert before buying or refinancing a business investment or commercial property.



Madison
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