All franchises, whether they be high or low-end options, require money on the part of the investor. Those with limited funds might need to wait and improve their financial situation before embarking on a new business venture.
If a franchisee is unable to secure a commercial bank loan or an SBA loan, alternative lenders may be an option. Their approval process is faster and less stringent than that of traditional lenders, but the interest rates are generally higher and the repayment periods are shorter.
Franchisees who have good credit history and a business plan may be eligible for a commercial loan with a bank. It sometimes helps to apply with financial institutions that have experience working specifically with franchises and not just small businesses.
The Small Business Association (SBA) allows investors to borrow up to $5 million for the purpose of opening a franchise or small business. Other lenders may have different limits, depending upon the individual’s credit history and business plan.