SBA Loan for Franchise Facts
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- Опубликовано: 5 окт 2024
- How are you planning to finance your franchise?
Did you know the SBA Franchise loans have a 5% interest rate?
You can buy a franchise with just 30% down
Learn how SBA loans compare to other forms of financing including 401k rollovers, friends & family and more!
Full article here: www.vettedbiz....
#SBAloans #VettedBiz #Franchise #Franchising #FinanceYourFranchise
Today I want to talk a little bit about the SBA loan, particularly for franchising.
Many of you might know that there are a lot of different ways to finance a franchise investment. You can go to friends and family, you could tap into your savings, you can even roll over your retirement account to open up your franchise.
However, I've vetted biz, we think that an SBA loan, depending on your profile, of course, could be the best option to finance a franchise in the United States.
Some of the positive aspects about the SBA loan program are that it's backed by the federal government, and banks, and there's 1000s of banks literally that do these loans. And we've reviewed over a million of which 100,000 plus went out to franchisees, there are a lot of capital providers with for the right franchise, you can definitely get funding financing.
Now, even though that it's may 2021. And things are looking brighter in terms of a COVID pandemic, there is SBA financing. So if you're looking to open up a new franchise, generally we've seen that terms are pretty favorable, where you can get an A franchise loan for a 10 year period. And essentially, it's a 5% interest rate. And at the end of the 10 year term, there are different options to refinance.
Depending on the performance of the business, too, you can take out another loan or open it up, take out another loan for a second or third location have the same franchise system or different franchise system. But we see that at a 5% interest rate. That's pretty cheap capital, especially when you only have to put 30% down. So if you're looking to open up a franchise that the total investment is $100,000, including a 30, year 40k, franchise fee, working capital equipment, the rent deposit, it's $100,000. To start up from scratch, you only need $30,000 cash, and then you can get a loan for another $70,000 through an SBA approved lender.
So a lot of large banks like like Chase, Wells Fargo, do hundreds, if not 1000s of SBA loans through the seven a program every year. And then if you find a franchise opportunity that you're going to be buying, it's already an existing location, it has financials from the past one to two years, you have tax returns from the franchise seller, you might be eligible for just 15% down. So imagine buying a franchise a million dollar franchise, say for like Dunkin Donuts, where you only have to put $150,000 down, and you can get a loan of $850,000, which you have 10 years of pay off at a 5% interest rate. This is a way that business owners in the United States can get a pretty high return on investment when you look at the return on their cash investment.
So if you're just investing $150,000 cash, and a million dollar franchise that could be making 200,000 $300,000 a year, that's a very high return on your cash investment, even when you account for debt servicing, which shouldn't be too high at a 5% interest rate. So if you're looking to really jack up your return, and increase the return on investment for your franchise, you should definitely look at doing an SBA loan. As right now, may 2021. Interest rates are 5% or even lower, depending on the lender. So going back years, we were seeing 8% 9% for many of the large banks, but now at 5% given the right franchise opportunity and we have a lot of data and vetted biz, where you can go through any franchise opportunity and see how many SBA loans have defaulted for that franchise...
Full article here: www.vettedbiz....
See if you are eligible for an SBA loan today! Take our eligibility quiz and we'll be in touch within 48 hours.
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What if franchises that I want has liquid asset requirements of $300k but I only have $120k cash + a online business that generates $80k/yr. Can this be a justification for $300k?
No, you'd need to sell or take a loan out from your online business
@@Vettedbiz can we setup a call because I have some detail questions to set myself up financially to meet these requirements.
@@hiddentyga do you already have a lender or would you look to us to secure the funding?
@@Vettedbiz no, I don't have a lender. I'll be looking into it with you.
@@Vettedbiz are we gonna be able to setup a call? Or is there anyone else I can inquire Abt my concern
I have found that a lot of banks don’t want to do an SBA loan for a new store, even if it’s a strong franchise. They tend to like existing stores
Yes, key is seeing who does new stores based on issuance data. If they are providing tens or hundreds of loans to emerging franchises you can assume they are mostly for new units
LMMFAO "ony 30k" like that's possible for most people
Well said. Can take quite some time to save up $30k. Especially if you have dependents like kids.
It’s definitely possible, a couple years ago I had a negative balance and I have more than that saved up. I’m saving up to get a franchise.