Franchisees are expected to borrow over $30 billion in 2016. With the substantial need of franchise financing, alternative options were bound to be created. In March 24’s edition of The Wall Street Journal, author Julie Bennett explores some new finance options in an article titled The New Age of Franchise Financing. We break down the benefits of these options below.
ApplePie Capital works to bring together proven brands, entrepreneurs, and investors to make funds more available. In a nutshell, it connects borrowers with lenders. Unlike SBA loans, borrowers do not need to put up personal collateral. Venture capital is the major source of money available from the site and approvals are faster than many financial alternatives (under 30 days). Loans start at $100,000 and have fixed interest rates that start at 8%. The interest rates are higher than some other financial options. You will have to weigh the benefit of speedy approval against the drawbacks of a higher rate. But if you need fast approval and don’t want to put up collateral, then ApplePie is a great option.
Website: ApplePie Capital
Pango Financial offers numerous financing options for small business. One unique offering of theirs is DreamSpark, a legal and penalty-free way to use your retirement savings as an investment. The program uses retirement rollovers long-term, rather than short-term. This gives your business the option to finance debt-free. Not only are you avoiding the usual taxes and penalties associated with withdrawing early, but it becomes an easier process overall for the franchisee.
Website: Pango Financial DreamSpark
FranchiseGrade is not a financing option for your business, but it does ensure you make the right investment. The website has conducted market research on thousands of franchise brands and then grades and compares the brand among other franchisors. If you plan to invest in a particular business, it helps to take the extra research step and discover how successful the franchisees have been. The reports cost you some money, but the information you receive is valuable and allows you to make a more informed decision.
Thoroughly consider your research and financial options before you make a final decision. To further aid in your decision, here are some more Franchise Growth Institute Resources: