Inadequate funding is the top reason why small businesses fail. How do you minimize this risk? Explore your funding options EARLY. Investigate your funding options as soon as you begin exploring a franchise.
Starting and scaling a business, anytime, is not for the faint-hearted. Regardless of market conditions, entrepreneurs need to be well prepared (e.g., winning concept, evidence of demand, execution plan, et.)… and owners need access to funds. The necessity of a solid funding plan may seem obvious, but all too often, people wait too long. Developing a sound funding strategy takes time – you need to become educated, understand the pros/cons of available options, and determine which will best suit your unique needs.
When it comes to financing, nothing happens overnight, and the lending marketplace constantly changes – community-based brick & mortar banks, specialized small business lenders, virtual banks, private lenders, etc. Because of the “great recession”, lending processes and regulations have become more rigorous. While not a bad thing, it makes the lending process more time-consuming. On the plus side, new options sometimes surface, and in certain instances, incentives become available. In rare instances, franchisors even offer lending solutions.
So what should you do? Find a highly experienced, professional funding company dedicated to serving the franchise industry, and become educated on your options. The best firms will help you do so “early” so that you can understand all available programs and their costs, timing, tax implications, etc. The info & insights below were provided by FranFund, one of the franchise industry’s top funding firms.
What Do They Do:
FranFund designs flexible, all-in-one funding plans to help you start or grow your small business or franchise. They offer a loan consultation service to help clients obtain SBA loans and have a 99% success rate in obtaining loans for the people they’ve given preapproval letters. They also facilitate the 401k Rollover/ROBS program.
Who Are They:
While FranFund is not a direct lending institution, if they were a bank, they’d be in the top 100 10 most active SBA Lenders based on the amount of volume they get approved and funded each year. approved loan value.
FranFund Funding Products
SBA 7a Loans: SBA 7a loans are great for business opportunities when the loan amount will be a minimum of $100,000 and a maximum of $5M. This is appropriate for brick-and-mortar opportunities, service businesses with vehicle/equipment requirements, as well as acquisitions. These loans can be closed in as little as 45-60 business days, and the timeline greatly depends on the time to obtain a lease for commercial real estate, if required.
401(k) Business Funding: The FranPlan utilizes the IRS Rollover for Business Startups (ROBS) program, allowing you to access retirement savings tax-deferred without the early withdrawal penalties. This can be a great alternative to a loan allowing you to invest in your business debt-free, or you can also use this product in combination with an SBA loan to cover the cash injection that lenders will require.
401(k) Rollover/ROBS: This is the fastest means to funding as the strategy typically takes 3-4 weeks to complete. FranFund has a Safety Net program that allows you to get a head start and move your money at no cost, and then it can lower that timeframe to as little as ten business days if the Safety Net program was already completed.
To learn more and schedule a free one-on-one Funding Consultation, visit www.franfund.com.
