Whether your franchise is for a gym, a hotel, or a restaurant, your company still needs financing options. Financing for a franchise can be used for expensive equipment or simply operational costs. There are many forms of credit for franchises, so it is important to consider all of the options available before you take out any kind of franchise loan.
Franchises have many different costs to get off of the ground, but one of the most expensive pieces can be equipment. One great option for a new franchise is to lease a piece of equipment through a lender. The lender buys the equipment and lets you use it for a monthly or quarterly fee. This can be a great option for new franchises that do not have the large lump sum required to purchase equipment.
Merchant cash advances are another option of a franchise loan that can quickly generate cash. This is a form of short term credit that is usually taken out of the receivables of the company. A new franchise, for instance, would get a lump sum payment in return for the promise of a percentage of future credit card payments. Merchant cash advances are a great way to use a company’s accounts payable to secure a lower rate.
A franchise might also consider an unsecured business line of credit. This is an easy way for a company to take out a relatively small loan that they would simply pay back at the end of the month, but these loans can have higher interest rates than secured lines of credit. An unsecured business line of credit is similar to how a family might use a credit card.
Operating a franchise can have many hurdles, but owners should be happy to know that there are many different options available for a franchise loan. Whether your franchise needs to secure financing for a major upgrade or simply for day to day operations, there are options available that will fit your needs.