4 Alternative Sources to Fund Your Franchise Business

Based on results from the 2008 NatWest/British Franchise Association Survey, 81% of new franchisees secured funding from a retail bank to start up their new business. The loan amounts varied but it accounted for anywhere from 50% - 70% of the start up cost needed to fund a franchise business.

Now, as lending criterias tighten, franchisee candidates continue to source funds from the banks but also through alternative means. This include leveraging assets including:

1. Home Equity
2. Pensions
3. Savings: ISA, Endowment, Bonds/Collective Invest, Share portfolio, etc.
4. Family Trusts: Inheritance, Family Assets, etc.

Whether or not any of these are appropriate, really comes down to each franchisee candidate's individual situation. Thus, would recommend getting expert advise from a Independent Financial Adviser like Kingswood Law. Particularly as anyone who embarks on a life changing decision to start a franchise business needs to take a business minded view in a number of key financial areas as this will undoubtedly affect their success.

Three key issues for each franchisee candidate to consider include:

1. To explore the low cost or even no cost ways to fund your business to ensure you get off to the best possible start in whatever business venture you decide. After all, any interest payments you have to make will be funded from your profits
2. To understand how to maintain access to a supply of low cost funds in the future to help your business grow and to take any pressure off cash flow problems as you establish your business.
3. Once established, you may want to understand the best way to protect both the business and your personal assets. This is just good planning as in the real world things don't always go according to plan. So minimising personal guarantees, and the risk to the family home are crucial.

So in addition to seeing a franchise business banker, would definitely encourage all franchisee candidates to discuss their new venture with an Independent Financial Adviser. Yes, you want to get access to the funds necessary to start up but you also want to make sure that you protect you and your family's way of life.