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The old saying goes that it takes money to make money, and this adage holds true for franchisees. Fortunately, there are many financing options available to help prospective business owners make their franchising dreams a reality.<div>Mike Rozman, co-president and chief strategy officer at <a href="http://www.boefly.com/index_var1.cfm?utm_expid=30616058-5.o3CzH7anQ4u2tGHEHtQW9w.1&amp%3Butm_referrer=https%3A%2F%2Fwww.google.com%2F&utm_source=1851franchise.com&utm_medium=article&utm_campaign=alternative-methods-for-financing-a-franchise-1114" target="_blank" rel="nofollow" target="_blank">Boefly</a>, spoke with 1851 Franchise about the paths franchisees should follow to obtain the money they need, as well as recent financing trends in the franchise industry. Once a franchisee knows what their net worth is, &#8211; what is the next best step for them to pursue business ownership? It&#8217;s important for a prospective business owner to understand what&#8217;s required of them to get open and to understand how long it&#8217;s going to take for them be profitable. At the same time, they need to be well prepared to engage with financing sources. One of the worst things a new franchisee can do is sit down with a lender and not be prepared to answer the lender&#8217;s questions. At best it will delay the franchisee in getting the funds. At worst, it will turn the lender off so that the franchisee never gets the funds. When we work with a new franchisee at BoeFly, we start by making sure the franchisee knows the credit scores &#8211; FICO and SBSS &#8211; that lenders will use to judge them. We like to say, it&#8217;s important to know the score before getting out onto the field. After credit scores, we work with the borrower to build a thorough financing package &#8211; because until that&#8217;s done, no lender will ever fund a deal. Do the work upfront and better outcomes will follow. Have you noticed an uptick in trends for certain types of financing options (aka 401k rollover, home mortgages, SBA loans, etc.)? Over the past 12 months, the SBA lending product has continued to heatup. Now lenders are using the SBA loan product to finance borrowers from lesser-known concepts. This presents an important breakthrough for younger concepts &#8211; but success rests on making sure franchisees are getting to the right lenders. Have you heard or seen of really unique ways people are financing there new businesses? I&#8217;m seeing a lot of excitement for a new bridge-finance product designed to serve start-up franchisees. New franchisees are a good match for SBA financing, but often lenders require some track record before approving a loan. The new loan product gets cash in the franchisees&#8217; hands quickly, sometime within days, and then after approximately six months the franchisee is then able to refinance into a lower cost SBA loan. I expect we&#8217;ll be seeing more of this type of solution in the coming 12-18 months. Are more franchises offering direct financing (specifically stronger, more established brands)? I&#8217;ve seen a drop in the number of franchise brands offering direct financing. This doesn&#8217;t come as a surprise, because the only reason why franchisors became lenders was to fill the gap left by lenders during the credit crisis. I am seeing an increase in brands offering financing support &#8211; some tangible tools that help the franchisee navigate the financing path.</div>

1851 Franchise

Boefly's Mike Rozman sheds light on franchise financing.

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