At Tenet Financial Group, we stress this statement in every conversation we have with prospective franchisees: “Franchise funding is not one-size-fits-all.” By Jodi Rowell
At Tenet Financial Group, we stress this statement in every conversation we have with prospective franchisees: “Franchise funding is not one-size-fits-all.”
Each person’s unique situation, including the chosen franchise opportunity, helps drive the funding conversation when working with a funding partner. Capitalization – not only in the startup phase but also through the entire life of the business – should be carefully considered because an estimated 80% of businesses that fail do so because they were underfunded and lacked the capital necessary to be successful.
How can you ensure you are fully capitalized and set up for success? By working with a full-service funding partner who is able to fund a $75,000 business with the same efficiency as a $3 million business you’ll be able to make an informed funding decision regarding these options and more.
401(k) Rollovers: Buyers with $50,000 or more in pre-tax retirement funds – such as a 401(k), IRA, 403b, TSP or Keogh – should definitely explore a Rollover. A Rollover is an equity-based (non-debt) method of capitalizing a new franchise, resale purchase, or even recapitalizing an existing business for multi-unit franchise operators/owners. A Rollover can also be used as a stand-alone funding option or with any of the three options below too.
SBA Express Loans up to $150,000: SBA Express Loans are guaranteed loans, resulting in more favorable terms for the buyer and less risk for the lender. Equity injection, cash in reserve, and some other requirements do exist.
Unsecured Term Loans: Unsecured Term Loans are great for those who don’t choose SBA funding. Available up to $250,000 per borrower, Term Loans are generally quick to fund and operate like a personal loan for the startup business, generally five-to-seven year terms.
Unsecured Lines of Credit: With this funding option, you only pay for what you use; there’s no collateral or financials required. And, credit partners can be used to qualify, making Lines of Credit a very manageable funding option for a business owner(s).
Jodi Rowell, senior consultant with Tenet Financial Group, grew up in a family that owned several franchises and spent years working in many different areas of their business. Having also worked with franchise development teams and as a franchise consultant, Jodi understands what it takes to be successful in franchising. Jodi can be reached at email@example.com or 801-494-1652.
For more small business tips, visit the Tenet Financial Group blog at tenetfinancialgroup.com/blog.
– Jodi Rowell