How to Use a Small Business Loan to Expand Your Franchise Business
Owning a franchise is a unique situation for small business owners because you have all the challenges of a small business while having to operate within the framework and guidelines of your parent company. This can make franchise financing, to open a new location, challenging to find. There are a couple of tips and tricks you can use to make most of your financing as well as find the best option such as knowing when you are ready, what you need and what your financing options are.
Are You Ready?
When you go to open your second location, you will probably need to prove some stability to your parent company and get permission for another franchise. You will want to make sure that your current location can survive without your presence because the new location will divide your time. You will also want to determine whether your area can support a new location and find a suitable area for it.
Do You Know What You Need?
Franchise financing can be used for more than just the space you need for a second location. You will also need equipment, supplies and insurance to get started in a new place and the better you budget for all those things, and more, the easier it will be to get the right funding amount. This can mean looking back over your books from your current location to see what expenses surprised you as well as having a contingency amount set aside for things you forget or cannot plan for.
What Are Your Financing Options?
There are a couple of different options you can choose for financing your new franchise location such as traditional bank loans, loans through the Small Business Administration and even investors. The more you study each of these options, the easier it will be to get the right one for your needs. For example, by studying all three of these funding types, you will learn that each one has a different timeframe for getting the funds and can use that application time to shore up other aspects of your company.
Franchise financing can sometimes be easier to find than you might think, particularly if you are looking to open a second location. The key is research. Once you research whether you, and your local area, are ready for another location, you can start the process of determining what you need to get going and which financing options are the best for you.