FirstLight Franchise Blog

How to Get Funding for a Franchise Business

Investing in any business is scary. It’s certainly a big commitment that requires research, time, and careful evaluation as to whether the business is the right fit for both you and the franchisor. Of course, once you’ve made your decision to invest in a franchise business, the next step is considering your funding options and which opportunities will fit you the best. .

It may seem surprising but commercial banks actually provide a great deal of funding for franchises. Reputable and well-preforming franchises will likely have a group of diverse lenders that they work with.  Moreover, if SBA lending is an option, see if the Franchise is on the SBA Registry (an approved list of low default franchise concepts).

Your credit score, work history and coverage of living expenses will be of most importance to many lenders.  Other factors considered by lenders on the franchisor include: How many locations or offices the franchise has; the more locations, the better the track record. This element shows the bank that this particular franchise does well in a variety of markets.

  • What’s the cash flow track record like?
  • Is the franchise you’ve chosen to invest in have a strong brand? What’s the business model like?
  • How are current locations operating in their markets?

Keep in mind when you’re applying for franchise funding, that just about any loan requires some type of collateral no matter what your credit score, financial background or the franchisor’s track record. Be prepared to invest your own personal money as well, (usually this is around 20%, but it can range depending on your loan package and type of funding). If you’re not willing to invest your own money or have help from a family member, you should probably rethink your commitment to investing in a business in general.

There are several different types of loans you can receive for franchise business funding. The Small Business Administration has loans available for veterans and active military members seeking to transition back to civilian life, as well as loans for women who desire to own their franchise business. For more information on the different loans that are available, you can visit the Small Business Administration website.

For information on funding and owning your own FirstLight Home Care franchise, please visit our franchising site and download a FirstLight Home Care franchise information kit), or you can give us a call: 1.866. 985.5348. We’re available any time to answer your questions.