Franchises offer a unique business opportunity. While much of the foundation will be delivered on a silver platter, there are still plenty of financial demands to start and grow a franchise. Some lenders may not loan to franchises, but others will be more than happy too. Here are our top picks for lenders online that can offer franchise business loans.
With many different loan options to choose from, Credibly is a reputable source for franchise business loans.While they prefer to work with more established businesses or franchises, their low minimum credit score requirement is attractive. Shop Credibly’s six different loan products to determine what best fits your needs. The downside to working with Credibly is high fees and high monthly revenue requirements.
Kapitus can offer franchise business loans up to $750,000 with funding in as little as 24 hours. Specializing in revenue-based financing, Kapitus utilizes monthly revenue to primarily determine what businesses are eligible to borrow. Kapitus also offers other lending products too so you can explore your options with Kapitus.
Fundation can offer franchise business loans up to $500,000 with an average funding time of 1-3 days. While loans typically require a personal guarantee and or business lien, rates and terms are competitive. Fundation also invests time into getting to know businesses and how they will use the money so they can approve more loans and better meet the needs of business owners. Their value of human touch is demonstrated by the extra steps they take to help business grow.
Oftentimes, franchise business owners with bad credit need loans, but don’t know how to get them. Finding the right lending partner that is willing to work with lower credit scores is a good starting point.
For franchise business loans for bad credit, check offers with Credibly. Credibly has a minimum credit score requirement of only 500.
Because opportunity does not wait, check out Kapitus for fast funding. Kapitus can fund loans as soon as the same day as approval. While funding times can vary, submitting requested documentation and a complete application can increase your chance of receiving funds faster.
Flexibility is key, no matter which end of a business deal you are on. For flexible repayment terms, consider working with Fundation for a franchise business loan. Fundation offers monthly and bi-weekly payment options and no prepayment penalties. Some of their competitors may require daily or weekly automatic payments.
Franchise business loans are generally just small business loans that are intended for franchises to use. Franchise business loans can be used for a variety of business expenses, depending on the type of loan. Often pursued for covering expenses associated with buying a franchise, stocking inventory, or day-to-day operations, franchise business loans can foster growth while maintaining healthy cash flow.
Repayment periods or terms, and interest rates can play a big role on total loan costs and monthly payments. The typical terms and interest rates can vary based on several factors. Most of the factors will point toward the risk a business poses to a lender. To understand what you should qualify for or what is typical based on your business credit score visit mySMBscore.
Qualifying for a franchise business loan with bad credit may not be the most desirable situation. While some lenders can work with bad credit business owners, it may be a better financial decision to improve your financial standing first. Visit mySMBscore today to unlock valuable insights that can help you improve your business credit score and receive personalized business loan offers.
Franchises themselves come with a unique set of pros and cons, as does getting a business loan for one. With a franchise you lack complete control and sometimes may be forced into a business loan for expenses or requirements enforced by the franchise. In general here are some pros and cons that can come along with franchise business loans.
PROS:
CONS:
The maximum amount you can borrow depends on what you qualify for, the type of loan, and the lender. While the ultimate determination is not limited to these factors, these can play a big role. Franchise business loans can be anywhere from a thousand dollars up to several million dollars and beyond. To capture a better idea of what you might be able to qualify for, check your SMBscore today and view analytics through the eyes of a lender.
Approval times can vary. You should note that getting prequalified is usually the first step. After submitting an application or inquiring, lenders can generate a loan offer. If you choose to accept, there are typically more steps to follow such as submitting documentation. This process is known as the underwriting process. After you’ve met the contingencies, you can become approved. Connect with the lender of your choice to determine how long this process usually takes and what you can do to help it go smoother.
Ready to check personalized business offers in minutes? Visit mySMBScore today!
Oftentimes franchise business loans are secured meaning they are backed by collateral. Requirements for collateral can vary depending on the lender. Examples of collateral can include:
Prepare for the lender to appraise or investigate the collateral before determining if it qualifies.
What you can use a franchise business loan for will depend on the loan amount and restrictions. While we love that you’re dreaming big, it’s best to work with a professional to determine how to achieve your business goals. Purchasing multiple franchises would likely require a very large loan.
To qualify for a business loan, you’ll need to meet the requirements. One of those requirements is usually minimum time in business. While some business loans cater to startups, there’s more risk involved. Therefore, costs can be higher.
Lenders usually have a list of industries they can work with. If the franchise you are trying to get funding for is outside of the scope, it might not qualify.
Getting a loan to cover franchise fees usually means the franchise is new to you. In this case, getting a loan can be challenging. You may need to borrow against personal assets or get creative. In some cases the franchise corporation may be able to assist with startup costs.
As a franchisee, you lack complete control and creativity. You are not responsible for the image of the brand or specifics, but only how your location operates (to a certain extent). As a result, there are additional risks of failure, although franchises may not paint the picture quite like that. With any business loan the main risk is being unable to pay or it causing expenses to be too high to churn a profit. Plus, if you’ve backed the loan with collateral you can risk losing that in the event you default on the loan.
With a franchise, a business model and rights are sold to franchisees. When getting a franchise business loan, documentation may vary due to the unique business model. Furthermore, it can be harder to qualify for since you don’t have complete ownership over the franchise.
The Small Business Administration can offer loans for franchises. To learn more, contact an SBA-approved lender. Hint: Look into SBA 7(a) loans.
Otherwise known as an unsecured franchise business loan, some business loans do not require collateral or down payments. While these loans may be in smaller amounts, they do exist. Without collateral there’s additional risk for the lender so expect your creditworthiness (personal and business) to be examined. Identify ways to improve your businesses financial position when preparing for a business loan at mySMBscore.
When taking out a franchise business loan, you’ll only want to borrow what you need. If you are unsure of how much you need, or need access to cash on a regular basis to manage cash flow, you may want to consider a business line of credit. As you determine how much to borrow, consider what you need the funds for. You may need to gather estimates for project costs or equipment to drill down on how much money you need.
Lenders often want to see a business plan as one of the requirements to qualify for a franchise business loan. A business owner should always have a business plan, whether a lender is asking for one or not. A detailed and intentional business plan can demonstrate to lenders that your franchise is on the path to success, giving them more confidence to approve your loan.
To qualify for a franchise business loan you’ll need to start by establishing your business enough to meet the lender’s requirements. While requirements can vary, checking your SMB (small to medium sized business) credit score can be a good starting point. At mySMBscore franchise business owners can check their SMBscore while unlocking actionable insights to improve their score. Armed with valuable information, business owners can identify and find more competitive business loan offers.
As a business owner, you can understand negotiation and making deals. When you apply for the business loan you are packaging your business and loan proposal for the lender, and so you should do so in a way that entices them to say yes. By ensuring your personal and business finances and credit history are stable and healthy, you can increase your chance of getting a competitive loan offer. When you work with mySMBScore to prepare or find a business loan offer, you can unlock information that can help you make smarter financial decisions. Plus, you can see your business the way lenders do, which can help you understand what they’re looking for. Get started today by checking your SMBscore on our business-owner-friendly platform.
As discussed earlier, Credibly is a great option for bad credit franchise loans. This is due to approving applicants with a minimum of 500 credit score. However, typically if you have a lower credit score this could mean a higher interest rate on the loan itself. There are other franchise loans you may be able to get with bad credit such as an SBA loan from the Small Business Administration. Once you are turned down by traditional lenders, only then can your application be considered by the SBA. In addition, your franchise must be making less than $13.5 million and located in the United States to be considered for an SBA loan. It's important to follow all the rules to apply for an SBA loan, especially with bad credit.
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
