Opening a franchise is something that every talented and spirited
entrepreneur has thought about. It combines the
profit-making power of a small business with the
low risk nature of an already established name
and brand.
Starting a business is not something to be rushed into. It is a process that should be well mapped out by the prospective business owner. In the case of a franchise, most of that thinking has been prepared for you, by the franchisor. In fact, one of the only things left to worry about with some franchises is where to get the money to fund the startup costs.
One of the best ways to get money is a franchising business loan.
Before exploring the available business loans for franchises, let's go over the basic background on franchises.
Franchising is a business method that involves the licensing and methods of doing business, such as a chain store, retail outlets which share a brand and central management (e.g. Subway stores). For more information on Australian franchising; please visit Franchise Council of Australia at http://www.franchise.org.au .
Lenders' criteria
Most banks offer franchise loans to their accredited list of franchisees, but you must satisfy the lenders' criteria for qualification. The primary criterion is the debt service ratio or serviceability test. Some lenders may accept applications where there is an adverse credit history, but most require a positive personal credit rating and clear evidence that your business is creditworthy. Moreover; you would be required to show work experience similar to the franchise industry for which the finance is asked for. Most will apply a loan-to-value (LVR) ratio and will expect you to invest a proportion of your own money into the purchase (Generally 30%-60%).
The lender's decision will also depend on the level documentation provided. They may ask to see your current Tax Returns, Business plan and Cash flow projections, to assure themselves that your business will continue to have the ability to make repayments on the loan. Some lenders impose restrictions on the type of franchisees accepted given the level of losses suffered etc. by lenders. To know which franchisees are on the panel of the major lenders; simply fill out the enquiry form or call us today.
Fees and Charges
Brokerage may be charged on Franchise loans being more complicated and harder to settle.
Starting a business is not something to be rushed into. It is a process that should be well mapped out by the prospective business owner. In the case of a franchise, most of that thinking has been prepared for you, by the franchisor. In fact, one of the only things left to worry about with some franchises is where to get the money to fund the startup costs.
One of the best ways to get money is a franchising business loan.
Before exploring the available business loans for franchises, let's go over the basic background on franchises.
Franchising is a business method that involves the licensing and methods of doing business, such as a chain store, retail outlets which share a brand and central management (e.g. Subway stores). For more information on Australian franchising; please visit Franchise Council of Australia at http://www.franchise.org.au .
Lenders' criteria
Most banks offer franchise loans to their accredited list of franchisees, but you must satisfy the lenders' criteria for qualification. The primary criterion is the debt service ratio or serviceability test. Some lenders may accept applications where there is an adverse credit history, but most require a positive personal credit rating and clear evidence that your business is creditworthy. Moreover; you would be required to show work experience similar to the franchise industry for which the finance is asked for. Most will apply a loan-to-value (LVR) ratio and will expect you to invest a proportion of your own money into the purchase (Generally 30%-60%).
The lender's decision will also depend on the level documentation provided. They may ask to see your current Tax Returns, Business plan and Cash flow projections, to assure themselves that your business will continue to have the ability to make repayments on the loan. Some lenders impose restrictions on the type of franchisees accepted given the level of losses suffered etc. by lenders. To know which franchisees are on the panel of the major lenders; simply fill out the enquiry form or call us today.
Fees and Charges
Brokerage may be charged on Franchise loans being more complicated and harder to settle.
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