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Overcoming Franchise Funding Fears

Contributed by Franchise Financing Partner Guidant Financial Group.

You want to dip your toe into the waters of business ownership and have decided to jump into a franchise. Maybe you’ve zeroed in on which franchise is right for you or perhaps you’re still exploring the options. Whatever you decide, you’ll need a way to finance the venture, and that can be intimidating. Getting a business loan can be tricky… even as the economy begins to heal. If you’ve got money, banks and credit unions will line up to loan you even more. If you don’t have money? Well, take heart—here are some alternative funding options that can put you at the helm of your own franchise:

  1. 401(k) Rollover, or ROBS (Rollover as Business Startup) If you have a retirement account, there’s a way to use it to finance your entrepreneurial dreams. Here’s how it works: You form a C-Corp that will operate your new business. You create a new 401(k) into which you rollover your existing retirement account. Then the new 401(k) buys stock in the C-Corp, and you’re in business. The caveat is it needs to be set up meticulously to avoid tax and penalties. Our partners at Guidant Financial are the dream team for this sort of financing.
  2. Portfolio Stock Loans - Tapping the value of fully-paid stock can be a way to secure cash for your business. Investors are basically pledging the value of their stock portfolio as collateral for a loan. In the best case scenario, your stock’s value will increase over the loan period enough to cover the interest. If your money is tied up in your stock portfolio and you need cash to get your business off the ground, this is a viable option.
  3. Unsecured Credit It’s called “unsecured” because the debtor does not provide any collateral. If you don’t want—or are unable to—put property or equity in property up as collateral and your personal credit is very good, an unsecured line of business credit can be a good way to get your hands on start-up capital. For a new business your application will most likely include a business plan and up to three years of earnings projections.

If you’ve got ambition and drive, but lack the liquid funds to purchase your slice of the American Dream, one of these alternative funding options may be the right choice for you. Remember to investigate business opportunities and financing options diligently.

To request information on Guidant Financial, CLICK HERE

The Best Automotive Franchise Opportunities in the USA

The automotive industry has long been an attractive category for aspiring franchise owners. There are nearly as many different types of automotive franchises as there are services and offerings for cars, such as maintenance, repairs, or car rentals. And regardless of the economy or gas prices,the number of automotive franchises is expected to grow due to rising car ownership in developing countries, new car sales, and maintenance and repair of older cars that continue to roam the world's expanding roadways.

Advice From Franchisees Who Have Been There

Many of the franchisees we talked with had to make a decision first on whether they would open an independent business or a franchised one. A few of their stories follow.

Five Most Expensive Franchise Types

There are thousands of franchises in all type of industries, some of which can be started for as little as $25,000 and some of which require millions of dollars. Here are five of the most expensive industries for franchise businesses: