A promising franchise candidate may love the concept, connect with the brand, and also feel ready to move forward. But does the prospective franchisee understand how to fund the franchise purchase?
Too often, people treat financing as one of the final steps in the franchise process. By then, the candidate may have selected a territory, reviewed the FDD, and invested considerable time imagining life as a business owner. If the financing plan does not work, everyone involved loses momentum.
Having financing conversations early can help prevent that.
Exploring financing early does not require a prospective franchisee to commit to a loan. It simply helps determine whether the candidate’s available resources and financial profile align with the expected investment. Credit history, verifiable income, existing debt, available liquidity, and the amount needed can affect which financing options are available.
This information can also help a candidate make better decisions. Someone may discover that a lower-cost franchise is a more comfortable fit. Another candidate may need time to reduce credit card balances, increase credit limits, or improve credit utilization before applying. A well-qualified borrower may learn that an unsecured bank loan can provide the needed funding without requiring collateral.
For qualified borrowers, unsecured financing can offer several benefits, including fixed rates for the life of the loan, terms of three to twelve years, no collateral, and no prepayment penalties. Funding is typically completed within 30 days, depending on the borrower’s qualifications and the complexity of the transaction.
Unsecured financing is not the right solution for every candidate. Many times, an SBA loan is the best option for a prospective franchisee. Strong personal credit, sufficient verifiable income, and manageable existing debt are important. However, unsecured bank loan funding can provide another path for candidates who want to preserve their assets, avoid pledging collateral, or explore an alternative to the SBA process.
For franchisors and franchise consultants, introducing financing earlier can help identify serious, financially prepared candidates before they reach the final stages of the process. It may also help prevent a promising candidate from walking away simply because no one explored all the available options.
The best time to discuss financing is before it becomes a potential roadblock.
If you have a promising franchise candidate who hasn't explored unsecured financing yet, Flourish Commercial Capital can review the candidate’s needs and determine whether an unsecured loan is the right fit. Prequalification is generally available within one business day.
Flourish Commercial Capital can help finance your clients’ dreams of business ownership.
Funding Your Business, Fueling Your Dreams.
