Franchisors do everything in their power to make sure that you get set up in promising locations with the trained staff and resources that you need to thrive from opening day onward.
Defraying startup costs and finding the most generous loan around is obviously also a high priority for most screen printing business investors. With a home-equity line of credit financing harder to attain for some, you really want to explore all of your financing options.
To make the process a lot easier, you also want to figure out your costs from the outset and respond promptly to lenders; credit commitments can last up to a month but many lenders appreciate a response within about 10 days. The early bird catches the worm.
When you can forward the name and franchise business plan of an established franchise and turnkey investment, you’re also in a much better position to get the loan that you’re after.
6 Ways to Finance Your Screen Printing Business
To get your screen printing business off of the ground you’ll need a respectable amount of liquidity and net worth and be able to cover your franchise fee. What’s the franchise fee? It helps cover things like branding and broad operational costs.
Screen printing business franchisees find that a good chunk of the total investment cost has to do with startup expenses like equipment rentals and space leasing. Depending on your exact location, the costs can vary a bit but having a rough idea of your expenses and incorporating those into your franchise business plan is always a good idea.
At least two sections of your franchise business plan should be about pro forma financial projections and your financial needs so that lenders will have a richer idea of where you’re coming from and how they can help you get the loan you need.
Your financial projections should include things like income and cash flow statements, and in your financial needs section make sure to include a thorough analysis of your startup costs, which you should get from your franchise disclosure document. After all that is hashed out, you can start thinking about contacting the following types of lenders:
· Franchise Funding Lenders
FranFund is a franchise funding lender that specializes in providing first-time franchisees and small business owners loans at competitive interest rates and generous repayment periods. FranFund scours the market for the financing option(s) that match your situation.
Franchise funding lenders can bundle anything from government-backed SBA loans and signature credit lines (a revolving line of credit not backed by collateral) to traditional bank loans and more affordable equipment leasing options than you might be able to find on your own.
· Family and Friends
This is still one of the most popular franchise loan avenues out there since family and friends are usually more than willing to help!
· Securities and Bank Loans
You can actually use stocks and bonds you may have purchased over the years towards securing a bank loan for your franchise investment. This is an interesting option that many people don’t know about.
The assets from a mutual fund can also be segued into a loan as long as that mutual fund isn’t part of an individual retirement account (IRA) profit plan. For young franchisees, that’s less of a concern.
· Government-backed SBA Loans
The U.S. Small Business Association provides repayment guarantees to banks and other lenders that lend to small business owners rather than providing loans directly.
The fact that a screen printing business operates in a recession-proof franchising sector and does well in a diverse variety of locations around the country should definitely up the odds of your getting an SBA loan!
The most common type of SBA loans issued to franchisees, according to the Wall Street Journal, are known as 7(a) loans. These kinds of low-risk loans are provided to franchisees from commercial banks.
· Credit Union
If you’re looking to get topped off, credit unions can provide small loans extremely quickly with great rates.
· Home-Equity Line of Credit
A home-equity line of credit or a second mortgage is another loan option that franchisees might want to pursue. The thing to realize here is that you’re using your own home as collateral, so paying back your loan on time is critical.
Even with a loan secured by a home-equity line of credit you can expect the bank to ask you to put up at least 20% of the total.