You May Be Ready to Invest in a Franchise, but Are You Loan-Approved?

If you’ve decided to invest in a franchise, you might have numerous questions surrounding how to become a success. One of these questions is likely how to finance a franchise investment. If you’ve decided on a franchise and have discussed the optics with a franchise consultant like the ones at Franocity, you need to learn if you’re loan-approved ready. 

Most people can’t afford to outright purchase a franchise, so you’ll have to evaluate your various loan options. Fortunately, most loans have the same application and approval requirements with a few key differences that you’ll have to evaluate. Two of the most popular finance methods for franchises are US Small Business Administration (SBA) loans and commercial bank loans. 

If you are considering these avenues, you’ll be interested in our article. We’ve discussed everything you need to know to determine if you’re loan approval ready to make your franchise dreams a reality. 

Here’s What You Need to Be Loan Approval Ready to Invest in A Franchise?

Below we have shared a few of the things you need to ensure you’re loan approval ready once you’ve decided to invest in a franchise. 

  • Clean tax reports: If you want to take out a loan to invest in a franchise, you must ensure that you have at least two years of completed taxes. Your lender will want to see that you’re a law-abiding citizen and that you honor your taxes. They will also want to check that you have paid all your taxes and are less risky. 
  • A good credit score: Should you not have a good credit score, it is sometimes possible to get a loan for a franchise, but it’s unlikely. So to ensure you’re considered for the loan you’re after, you need to ensure your credit score is good by diligently paying your bills and debts on time. You should also note that a credit score of 700 or more will make you a viable borrower. 
  • A solid company plan: If you don’t have a real and plausible business plan that shows lenders you’ve planned to succeed, you’re unlikely to get a loan. With a well-presented and detailed business plan in place for your franchise, a lender can learn your future ability to repay a loan. So be sure to outline your anticipated timelines for profitability. 
  • Cash reserves: To improve your chances of obtaining a loan to invest in a franchise, you need to have some cash reserves. Should you be able to show that you can pay back your loan if your business goes under, a lender is more likely to consider you a low-risk client. You can always use your home as collateral if you don’t have cash. 
  • Promising forecasts: If you work with a franchiser, you can get statistics and forecasts about the franchise you’re interested in to show the lenders. If they see that your franchise has a high chance of succeeding, they will see you as a lower risk. 

Speak With An Expert at Franocity Today to Discuss Your Franchise Dreams

Getting a loan for a franchise you have your sights set on can be incredibly difficult. Fortunately, with the right guidance and assistance alongside what we mentioned, you’re more likely to successfully obtain the financing you need. 

If you’re ready to begin your franchising journey and want help, you can speak with us at Franocity. We can get you the forecasts you need in addition to helping match you with a franchise you deserve to own. So get in contact with us here, and we’ll be in touch with you.