Finance Guide: Franchise FinanceMay 3, 2016
New businesses often have a high rate of failure. In order to mitigate the risks of starting a new business, many entrepreneurs turn to franchises, which have a proven business model.
In the beginning, financing a franchise business can be complex to set up as there is usually a sizeable investment involved, leaving the owner potentially short of cash to run the business. However, because franchising is seen to be a less risky way to start a business, many lenders are happy to provide enough funding to make starting a franchise viable – if the franchisor is well-known and reputable.
Typically, lenders will expect you to fund around one-third yourself and the funder will lend the remaining two-thirds of the total cost. Once the initial investment has been secured it is often necessary to consider traditional funding arrangements to enable the purchase of equipment and stock, premises and of course working capital to ensure that you can trade successfully and pay bills.
Often these additional funding lines can be provided by funders who specialise in invoice financing , asset finance and both secured or unsecured working capital loans .
Making sure you have the right finance for your business is complex and can often be confusing.
There are so many options that can seem very similar, but which when reviewed closely can be very different in terms of monthly payments, overall costs, up-front fees and terms and conditions.
If you’d like to talk to one of our Business Finance Specialists:
Call us on 020 3637 2455
Or email us on [email protected]
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