Financing the Purchase of a New Franchise or Existing Business
While cash is always king, there are some financing alternatives available for many investors wanting to start their own business:
- With good credit and a strong net worth, some franchisors will finance a portion of the franchise fee and equipment costs.
- With good credit and a strong net worth, some franchisors will provide a loan for a portion of the initial investment through an affiliated finance company.
- A bank loan guaranteed by the SBA (Small Business Administration) may be available. The SBA guarantees certain business startup loans up to 90% of the loan amount on attractive terms. We can provide you with additional information. See: Small Business Administration-SBA Loans.
- Many buyers are utilizing 401 (k) or IRA rollover funds to acquire a franchise. This involves reallocating your investments from your current holdings to your own company. See: Acquire a Business with Self-Directed IRA and 401k Accounts.
- Today, many investors are using the proceeds of a Reverse Mortgage to acquire a franchise or new business. Investors that are age 62 or greater may qualify for
a loan that carries no monthly payments until their house is sold. See: Reverse Mortgage Loans-Buy a Franchise or Existing Business.
- Another common option is to obtain a home equity loan. This can be a standard home equity loan or a home equity line of credit.
- For certain types of business, the principals of Pacific Business Advisors may provide a portion of the initial investment. Call for information.
The business broker consultants with Pacific Business Advisors can assist you in comparing the various alternatives available. There is no cost for a consultation.
Advantage to Buying a Franchise
Franchise Disclosure Document (FDD)