Funding a franchise can seem a daunting task at first. It can be a fairly large investment, but one that you are hopeful will pay off.
Nonetheless, what are the options available for franchise funding, and how easy can it be to fund a franchise?
In this blog, we explore 6 ways to secure that funding for your franchise, so that you can get your new business on the road.
Not sure where to start when it comes to financing your franchise purchase? Here’s 6 ways that you can get funded:
1. A Bank Loan
One of the first places most potential franchisees will look is to their high street bank. Banks can offer relatively competitive rates, but the difficult part is convincing them to part with the cash in the first place. Business always carries risk, and a franchise is no different. The bank will want certainty that you know what you’re doing, and that you will of course be in a position to pay the money back.
The good news is, as a franchise group, Sparkle Cleaning have been through this process a number of times. This means that we can help support and guide you through the process. We’ll provide you with a full custom business plan, forecasts, budgets and even prep you for the loan application process. This will give you the best possible of chance of securing a bank loan.
2. A Start-Up Loan
A start-up loan is a government-backed personal loan available to individuals looking to start or grow a business in the UK. It is provided through the British Business Bank.
The loan is unsecured, so you won’t need to provide any guarantors or risk any assets for the application. Furthermore, if successful, you will receive 12 months of free mentoring and exclusive business offers to help you succeed.
The maximum available per individual is £25,000, but all owners or partners in a business can individually apply, with a maximum of £100,000 available per business. The interest rate is set at 6% per annum. Find out more here.
3. Enterprise Finance Guarantee
This is another government-backed scheme which will need to see a sound business strategy and proposition. As with the bank loan option, we can help you with the application, the business plans, budgeting and forecasting, giving you the best opportunity to succeed.
In this scheme, the government backs 75% of the loan, reducing the risk to the lender and making them more likely to lend – especially if you don’t have sufficient security to secure the required finance.
You will need to pay back a 2% annual fee to cover the costs. Find out more here.
4. Local Government Finance Support
There are lots of regional government-funded support services available, designed specifically to help start-ups and small businesses in the area.
You can find which organisations are near you by searching for your region here. Once you find your local entity, contact them to see what funding options they may have available.
Sometimes there are specific funding options for specific regions of the UK; you’ll need to check your eligibility, but usually the organisation is able to advise you on what’s best.
5. Personal Savings
It might sound obvious… and that’s because it is! Using your personal savings has one big advantage over any other funding option; it ensures you have skin in the game, and creates a constant motivator for you to succeed in your franchise.
Whether it takes you 3 months, a year, or longer, using your personal savings to invest in your future and in your business is often a wiser decision than letting it gather dust in a savings account, where it will be slowly eroded by inflation.
6. Funding Circle
Funding Circle is a great example of a private lender that specialises in funding start ups, franchises and small businesses. They have a slightly different lending model and lending criteria, but they do tend to be more flexible with their lending, and are open to lending more frequently when compared to banks.
They champion themselves as the UK’s number one platform for small business loans, which is testament to the great work they’ve been doing. Find out more here.
The next thing to do is to browse the funding options and evaluate which one is most suitable for your situation. Then you can prioritize which avenues you will try first.
Everyone’s financial situation is going to be slightly different, so you just need to find the funding option that you are most comfortable with.
Once you made your decision, get in touch and we can help you put together the relevant documents you might need, such as a budget, forecast and business plan.
Then you’ll be one step closer to owning your own Sparkle Cleaning franchise, and closer to the future and happiness you truly deserve!
It’s simple to get a quote. Just choose a time and a day that suit you, and we’ll meet you at your premises to discuss your exact requirements. After that, our straightforward, flat-rate pricing structure means we’ll be able to give you a definitive cost quickly.