The franchise might seem appealing to most of you. But getting started on it can be quite tricky. There is no doubt that franchises offer a great deal of support for the owners. But to manage a franchise properly, capital is required.
To run the franchise successfully, the SBA loan can prove to be beneficial for you. They offer to fund for a small business franchise that requires capital to get started. The SBA franchise directory will let you know if your franchise is eligible for the loan or not. It has names of each of the franchise that has been approved for funding in the United States.
Requirements of SBA loans:
For the qualification procedure, you must submit a Franchise Disclosure Document to the SBA. After the submission of the document, the SBA will check whether your franchise meets their requirements or not. Once you are marked eligible by SBA, you can enjoy the benefits of small SBA loans.
Eligibility Criteria for Franchise:
To be eligible for the SBA loan, the franchise must not engage in activities that are considered illegal according to the SBA regulations such as gambling, lending and religious education etc.
Your franchise must operate within the United States. SBA asks for experience in industry and management for the qualification of the loan. Borrowers with a track record of bankruptcies are not eligible for the loan.
To successfully qualify for the loan, you must have a strong business background, an effective business plan and financial statements. However, if still something is missing, then SBA will ask you for a personal guarantee or collateral.
It will be ideal if you have a business background of at least two years. This is because the lenders want to know that you are credible enough to pay back your debts and can expand your business in a right way.
Things to know regarding SBA Express loan:
The most important thing a borrower should keep in mind is that they cannot use the SBA financing to pay their franchise fees. It would be ideal for the franchisee to pay off the fee of the franchise before applying for the SBA loan.
However, you can use SBA express loan for other things to boost your business. SBA Express loans offer up to $350,000 loan amount, which is enough for franchise startups to expand their business.
Other options for SBA loans for Franchises:
Not every franchise will need the SBA express loan. For this reason, the SBA has several loan options that will meet the needs of every franchise. For instance, if your franchise needs more than $350,000, then you must opt for SBA 7 (a) loan and 504 loans. These two can be an excellent choice for you if you have been in this business for an extended period. However, if you have just entered in this franchise business, then SBA express loan will be an ideal option for you.