| A low cost franchise may be priced so low that a | | | | even if the franchise itself is a low-cost opportunity. |
| lending institution won't consider a business loan for it. | | | | This is increasingly becoming an option as the |
| In some cases, financing isn't necessary with a low | | | | recession has made it more difficult to get bank loans |
| cost franchise because the franchisee has enough in | | | | for financing. A franchise opportunity that offers |
| savings to cover it. But in other cases, some level of | | | | financing to new owners will be more attractive to |
| financing is needed. There are many places to find | | | | potential franchise owners, giving companies a vested |
| that financing, from the conventional to the | | | | interest in creating these programs. |
| less-than-conventional. | | | | Some new business owners finance their businesses |
| One way to get financing for a low cost franchise is | | | | by cashing out their 401(k) or an IRA. Depending on |
| to get a home equity loan or line of credit. This can | | | | your age, you may have to pay penalties to use this |
| be done in smaller amounts than most business loans, | | | | money, but access to it is often easier than going |
| and it provides one important benefit to | | | | through a bank for financing. Other ways to raise |
| homeowners. The interest on a home equity loan is | | | | money for franchise expenses include selling |
| tax deductible. This gives you more money at the | | | | something to pay for the fees, such as trading in an |
| end of the year that can be put back into your | | | | expensive car for a less expensive one, selling a |
| business if you choose. This does present some risk, | | | | timeshare or otherwise raising funds from your |
| so many homeowners choose not to use their home | | | | existing assets. |
| as collateral. However, if the amount you need is | | | | If you don't want to access any of these financing |
| small, too small for a business loan, a home equity | | | | methods and your chosen franchise company doesn't |
| loan may simply provide you with a quick way to get | | | | offer any financing, there is also the option of taking |
| the money together without presenting much risk to | | | | on a partner or seeking out venture capital |
| your equity. | | | | companies. Choosing to take on a partner may mean |
| Credit cards can often be used to finance a low cost | | | | that your profits are cut in half, but it can also mean |
| franchise by supplying the borrower with either the | | | | less risk and quick financing for your low cost |
| full amount of the franchise costs or by | | | | franchise. Venture capitalists have the same |
| supplementing the money you already have in order | | | | advantages and disadvantages, though they generally |
| to make up whatever is lacking. Most credit cards | | | | ask little in the way of actual participation in the |
| can be used to obtain a cash advance on the credit | | | | business. From all of these methods, virtually any |
| line, and this can be used to supplement the money | | | | potential franchise owner can find the best method |
| you are using to finance your franchise. | | | | of financing that dream. |
| Some franchises offer their own financing programs, | | | | |