Many would be entrepreneurs have dreams of starting their own small business franchise in New York but are held back because they don’t see how they would be able to fund such a venture. Fortunately, there are many opportunities for funding available if you know where to look.
The following is an outline of just a few of the sources you might consider to help you fund your franchise, keeping in mind that everyone’s financial circumstances are different and that you should employ the help of a professional before deciding on which funding method(s) are right for you.
401k Funding
If you’ve been in the corporate world for any length of time, chances are you’ve built up a decent amount of savings in your 401k. The Rainmaker Plan is an option to roll over retirement savings into your own business without having to worry about taxes or penalties. To date, this plan has helped to provide much needed capital for over 10,000 entrepreneurs in a 30 year time period.
SBA Loans
A new franchisee may qualify for any number of Small Business Administration (SBA) loans but the SBA 7A ranging from $500k to $5MM is the most common. For those who also need to purchase real estate or equipment for their small business franchise, a SBA 504 is also an option. These types of loans require that the borrower have a solid credit history along with collateral.
Life Insurance
Another option for those who hold a permanent life insurance policy is to take advantage of the either the cash value or the death benefit amount. Cash value in a life insurance policy can be borrowed or the death benefit can be used as collateral to get a loan from the bank.
Equipment Leasing
Another option for new franchisees may be to lease their equipment rather than purchase it outright. Even if you think you can afford to purchase, it might make sense to explore this option to ensure that you have enough cash in reserve. Company vehicles, machinery and computers are all examples of items that can be leased. The advantage here is that often no down payment is required and interest rates are usually quite reasonable.
Which funding method is right for me?
Finding the funding method that works best for you and your small business franchise in New York can be a bit of a process. It is important to understand the implications of each before making your final decision. FranNet can help you review these and other options.
We can also help you with your business plan so that you can make your pitch to the bank. Obtaining funding for your business requires both strategy and vision. It’s important to know what your sources of cash flow will be, your net worth, and how you will pay back any loans. By fulling exploring your options however, and devising a professional and well thought out pitch, you will be well on your way to getting the funding you need and starting your small business franchise in New York.