If you were buying a house, you might explore funding options and get pre-qualified for a mortgage before beginning your search. But did you know there’s a similar process available to aspiring entrepreneurs?
Business owners interested in purchasing a franchise can get pre-qualified for funding before committing to one brand or another. Doing this puts you at an advantage during the franchise discovery process, allowing you to be certain of the brands you can afford and mitigating funding delays, so you can become a business owner faster!
Funding options for franchise purchases
Aspiring owners of a franchise have a few options when it comes to funding their purchase. If you have pre-tax retirement funds like a TSP, Keogh, 403b, 457, non-Roth IRA or a 401(k), you may be able to roll that over under a Rollover as Business Startup (ROBS) and use those funds as capital. You might also have personal savings to tap into.
The reality for many franchise owners, however, includes loans. Whether through your bank or the Small Business Administration (SBA), loans can help you access the funding you need to buy into a franchise and get your business off the ground.
How can you pre-qualify for franchise funding?
Pre-qualifying for a loan is not the same as being pre-approved. Many lenders and financial partners offer quick, no-obligation pre-qualification calculators that allow you to get a snapshot at the funding options available to you using your current financial information.
Pre-qualifying for loans is a step that’s easily missed. However, it benefits most entrepreneurs to pre-qualify to get a better sense of their franchise budget and make smarter business decisions.
- Shop within your budget: Pre-qualifying makes the research process simpler, faster and less stressful! The cost to buy a franchise can vary drastically and you may not be eligible to buy into certain franchises because of the cost. Pre-qualifying for loans gives you a better since of your financial position, which allows you to narrow down your pool of options based on your investment comfort level.
- Minimize funding delays: Pre-qualifying for loans also helps mitigate delays during the actual franchise purchasing process. If you pursue a franchise but later discover you aren’t eligible for as large of a loan as you expected, you might cause significant delays in the process or not be able to complete the purchase at all. Sadly, time kills deals in franchising, so it makes a lot of sense to get your funding “ducks in a row” as best you can early on in the discovery process.
- Less stress: By pre-qualifying for funding, you’re able to spend less time worrying about the logistics of buying into the brand. This gives you the freedom and time to focus on finding the brand that best aligns with your values and interests as a business owner and setting up a successful business.
If you’re planning to purchase a franchise, don’t skip this important funding step. Use our pre-qualification calculator to determine the funding you may be eligible for. Then, turn to Tenet Financial Group to get set up with the right combination of financing products for your investment. Contact us today to learn more.