One of the key steps when acquiring a franchise is to raise the necessary funds to embark on the adventure. However, it is not easy for entrepreneurs to find financing, especially without experience in starting a business. To help you, here are a few sources of financing that you can seek out for investment capital.
1. Bank loans
Bank loans are a great source of financing for your business. Some franchisors even maintain close relationships with certain lenders. Whichever bank you choose to approach, you will need to prepare a well-organized document that clearly presents your financing needs, a conservative estimate of the results of the franchise, and how you plan to repay the funds. You will also be asked for supporting documents such as tax returns, financial statements and credit information. Know that you have a better chance of obtaining financing if you choose a known brand with an enviable reputation. And a reputable franchisor who supports you could also help you put together what it takes to prepare your claim.
2. Government programs
There are many government guaranteed small business loans you can apply for to finance your new franchise, including those from the Government of Canada. The federal government site is a good starting point for information. Remember, however, that it may take some time for you to receive the loan money. So make sure all your documents are in order to avoid unnecessary delays.
3. Personal or family savings
Many people think of tapping into their personal savings or seeking help from a family member first. And for good reason: these funds are available more quickly than most other sources of financing, in addition to being accompanied by much less cumbersome administrative formalities. If part of your funding comes from the savings of a loved one, be sure to come to an agreement with them on the terms of the loan to avoid future disagreements.
4. Financing of the franchisor
Some franchisors also offer financing solutions to their franchisees. These can take the form of a loan or a reduction in royalties.
Interested in learning more about franchising opportunities with The UPS Store Canada? The UPS Store Canada has been in the franchising industry for over 40 years, including over 30 years in Canada. Consult our experts today to learn more. Call toll-free 1 800 661-6232 or email us at [email protected].