Many people fantasize about starting their own business. However, one of the most significant hurdles is a lack of capital to get started or poor credit, which stops them from financing a franchise.
The good news is that even if you have poor credit or no money, you can still obtain the financing you want to purchase a franchise.
Maybe you have poor credit but expertise and experience in the franchise's industry. Then you might be able to find a lender ready to take a chance on you.
Keep in mind that lenders are typically more ready to provide you with a loan for a franchise purchase simply because there are fewer risks involved versus starting a new business.
This is because a franchise comes with a known brand, established customers, and a proven track record, which makes them appealing to lenders, especially if the borrower has industry experience.
If your credit is less than stellar, your best bet for obtaining a franchise loan is through the Small Business Administration (SBA).
The government guarantees a portion of SBA loans to borrowers, lowering the lender's risk of loss. Most lenders like this arrangement, but it is especially important if the borrower has poor or no credit.
Remember that before you may acquire an SBA loan, a bank must reject you. After a bank declines your loan application, that bank or another can submit it to the SBA for review.
Additionally, you can search for a smaller franchise that would cover your business costs. They'll let you pay it off with your other monthly royalty payments.
These franchises that are willing to help you in getting started are an excellent option to enter into franchising with little or no money and poor credit. It might be a stepping stone to a larger franchise investment in the future.
The bottom line is that you can continue your ambitions to become a franchise owner. Even if you have limited cash and bad credit, you have choices.
If you have questions about what to consider for franchise investment, please schedule a brief call with me.