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One of the benefits of entering the franchising world is that there is already a support mechanism and network of resources in place. Maybe you found the perfect business concept&#8212;one that seems to add up from every angle and couldn&#8217;t be better for you and your future plans. But the only problem is you don&#8217;t have the capital to open the doors. There&#8217;s a basic understanding that franchising has initial costs, and in order to thrive, the capital must exceed the cost. Initial franchise fees are spelled out in the contract, but oftentimes, those costs don&#8217;t include operating fees, inventory, or any updates and structural changes needed to meet corporate standards. Banks, investors and a number of other resources, like lending institutions, have their own lists of qualifications that candidates must meet in order to receive the necessary funding, so how do you know what route to take? CEO and co-founder of <a href="http://www.boefly.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=boefly-shares-tips-on-financing-your-franchise-2806" target="_blank" rel="nofollow" target="_blank">BoeFly</a>, Mike Rozman, helps pair small business owners with lenders in order to make sure both groups are getting the most bang for their buck. Understanding the industry from the inside-out helps give insight on the way new and existing business owners can best be positioned for a loan to get things up and running, and it all starts at the base with liquid capital. Having liquid assets, valuable collateral and a good credit rating will go a long way in helping you get a franchise loan. Most banks will be looking for an owner to inject 20-25 percent of franchise startup costs from their own wallets before considering lending options. &#8220;This is the bank&#8217;s best way to ensure that their borrower has &#8216;skin in the game,&#8217;&#8221; Rozman said. Would-be franchisees need to show banks that the borrowed money will turn into a profitable business venture, and bankers want to understand the risk of making such a loan. Rozman believes that proper preparation and a good understanding of your credit report is the best way to ensure success. &#8220;The most important step for a new franchisee is to understand where they stand today,&#8221; said Rozman. &#8220;I often think of this process of getting a loan as an open book test. You should know the banker&#8217;s questions, and how your answers might come across, before they ever get asked.&#8221; For example, the brands that rely on <a href="http://boefly.1851franchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=boefly-shares-tips-on-financing-your-franchise-2806" target="_blank" rel="nofollow" target="_blank">BoeFly</a> recommend, and in some cases require, that the franchisee get their <a href="http://1851franchise.com/details/2780/BoeFly-rewriting-future-of-franchise-development-" target="_blank">bQual</a> report so they know immediately how banks will judge them. With this information, a franchisee will understand what their financing path will be like, removing any guess work and uncertainty. Once a potential franchisee has done the homework and is prepared to meet with a lender, the next step is figuring out where to apply for a loan. According to Rozman, there are loan options catered specifically to first-time franchisees, and finding the right partnership can be made easier with a little guidance. BoeFly has consistently seen positive results using SBAs, which are essentially partners dedicated to helping start-ups with financing. In the end, resources like BoeFly help craft an accurate financial picture and remind owners to keep an open mind when comparing and contrasting options&#8212;it&#8217;ll save a lot of time and stress as a franchisee navigates the way to unlocking the doors of their first business.

1851 Franchise

You did your research and found the perfect franchise opportunity, but when it comes to financing this venture, what route do you take?

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