SBA Loans for Franchises

Financing is one of the most frustrating and confusing aspects of starting a franchise business. However, there is one among the popular methods in franchise financing that franchise owners can turn in order to assist financial matters.

They can at least help themselves regarding the issue of money.

In this article, one of the best known methods you can learn in financing a franchise is through the SBA Loan. They are loans basically offered by lenders, in particular with banks fully guaranteed by the Small Business Administration of the federal government. They can lend you enough money once you have clearly presented the financing concepts of your franchise. The majority of lenders will likely require you certain requirements to expedite the SBA Loan processing when you apply for SBA Loans. Below are “The Four C’s you need to understand to fully obtain SBA Loans.


First and foremost, lenders would entirely look at your credit history or record to be sure if you are paying bills on time. Have you ever had loans before and repay for them later? One of the best possible ways to handle your credit standing, in terms of character, is to merely get a credit report copy from any lending institution. In today’s highly revolutionized era of computer technology, character still comes as the most important C among the four C’s. For as long as you remain with good credit standing, it’s not difficult for your loan to get approved. Try to go back in the past when you have consequently made several loans to lending institutions. If, in case, you did not pay back your loan, sure it can affect your current standing now that you’re applying for SBA Loans.


Apart from character, collateral is second to the four C’s that will be required by lenders in securing your loan. Remember that these assets are collaterally made which can be forfeited if you have failed to pay the loan. SBA Loans actually require that the business franchise will present its assets as collateral. Additional collateral are still required by the SBA Loans like a deposit certificate or home equity.


In addition, remember that lenders would be interested in giving you a loan once you invested it as a capital for a business. You will likely get approved when you loan 60%, rather than 90% of the whole franchise’s cost. They can also allocate additional capital you can make use of when starting your franchise.


The last among the four C’s is the capacity wherein lenders can fully examine your franchise’s ability in repaying the loan. If you have anticipated that the franchise will generate $1500 not less than a month, a bank will be dubious in giving you a loan wherein you need to repay $2000 per month.


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