Loan for Franchise Business

Set Up Your Franchise with Franchise Business Loans

June 29, 2022 • 5417 views

Operating a franchise can help you enter the world of entrepreneurship and earn a profit once you are settled. When you obtain a franchise of an established brand, you need not struggle with branding, and your operating protocols are well-defined. However, every brand will have one requirement: you need sufficient working capital to pay for the franchise and manage the operating expenses later.
In India, the franchise option allows you to expand an established brand into a profitable business in new markets. Moreover, you can avail of a loan for a franchise business to easily meet your financial requirements.
This blog covers how you can seek a loan for a franchise and what are the various indicators that need to be considered while tracking a new opportunity. Continue reading for a detailed understanding. 

5 Loan Options for Your Franchise Business

Whether you are planning to scale your franchise business online or offline, these are the best ways to finance your venture:

1.    Obtain Financing from Franchisors
If you have already chalked out your franchise business plan and are in urgent need of money, consider approaching a franchisor. Many franchisors tie up with specific lenders who can offer more personalised loans that suit your specific business prospects. Also, taking this decision can offer additional benefits.
For instance, you can expect one-stop-shop solutions while purchasing equipment that is indispensable during the initial days of the business. As the franchisor will be able to assess the associated risks in advance, they will guide you in a better way in terms of financing.

2.    Apply for a Franchise Business Loan
These days, you can easily apply for a Franchise Business Loan from various financial institutions like NBFCs. This loan is usually collateral-free, comes with favourable interest rates, and also offers flexible repayment options. 
It must be noted that before approving your loan application, the lender will thoroughly assess your business plan. This step is not skipped as it plays a crucial role in determining your repayment potential.

3.    Opt for a Line of Credit for Business
Many businesses tend to opt for a business line of credit that comes with a pre-defined limit, allowing them to avail of funds as and when required. You can avail of a line of credit for your franchise business and use the funds as needed up to the credit limit.

4.    Pursue Alternative Lending Options
In case you’re unable to avail of loans from conventional financial institutions, you can choose alternate lending options like crowdfunding. You can also look for lenders who specifically offer Business Loans. However, it is important to note that such loans may come with a higher interest rate and strict repayment conditions. 

5.    Seek Funding from Your Network
You can always choose to seek out funding opportunities for your franchise within your network or personal groups. However, it is essential to make these deals official. Before accepting the money, initiate a written contract clearly stating the repayment terms and mutual expectations. It will help avoid misunderstandings later on.

ALSO READ :- Must Ask Questions Before You Apply for a Business Loan…!

6 Steps to Set Up Your Franchise with Franchise Business Loans

Here are the six strategies you must implement before seeking a loan for a franchise business:

1.    Identify a Business Opportunity and its Working Capital
Unless you are about to become a franchisee of a well-reputed and high-on-demand business, ensure to thoroughly evaluate your prospects. If the franchise business you are planning to start has already been rolling in your area, then you should reconsider before proceeding further. If you are new to the concerned industry and are fearing the risk of underperforming, then you can try looking for other opportunities. Based on this decision, the working capital will be decided. 

2.    Preparing a Business Plan
Once you clear the first step, you must now concentrate towards preparing a robust business plan. For example, you can consider various things like equipment information, advertising details, infrastructure details, etc. To reach the break-even point, invest quality time to consider multiple things, including monthly revenue, expenses, and profit margin. Once the business plan is ready, you will know how much loan you need to borrow.

3.    Make a Practical Decision About the Required Amount
Most people compare how much other franchise owners earn and start assuming they will make the same profit. However, you mustn't forget that markets vary by location and other factors. Plus, you need to be prepared for any losses as well. So, make sure you are always prepared in terms of how much funds you require for your franchise business.

4.    Check Eligibility for the Loan 
Your loan eligibility amount depends on factors like your disposable income, work experience, and employment type. Additional details include your age, citizenship, and your credit score. Your minimum monthly salary should be above ?20,000, your age should be 22- 57 years. You must also have a minimum work experience of 1 year with at least one month of stable employment at your current job.

5.    Calculate Your Loan EMI
You must calculate your EMI beforehand whenever you’re applying for a loan. NBFCs like Poonawalla Fincorp offer a Franchise Business Loan EMI calculator, where you can get details of your monthly loan repayment schedule. Use the calculator to enter the loan amount, repayment tenure, and interest rate. You will immediately know the exact amount you need to pay every month and provide a detailed repayment schedule.

6.    Apply for an Instant Franchise Business Loans Online
You can apply for an instant loan online in just a few steps:

  • Step 1: Visit the lender’s website and click on ‘Apply Now’.
  • Step 2: Fill in your basic details like name, mobile number, PAN, email ID, loan amount, and tenure.
  • Step 3: Upload and submit the required documents with the application form.

To Conclude

With the right planning, getting a sufficient loan for a franchise business is an easy process. It allows you to run your business smoothly. For this reason, it is essential to decide the optimal loan value and refrain from overborrowing. You can consult with Poonawalla Fincorp and get your Business Loan within a few minutes to finance your franchise business!

Frequently Asked Questions About Franchise Business Loan

1.         What should I consider when choosing a franchise loan?
While finalising a lender for a franchise loan, make sure to conduct thorough research. It helps to select a trustworthy lender that will provide the business loan at a competitive interest rate and will agree to adjust the loan term at your convenience. 
2.         What are the benefits of getting a franchise Business Loan?
These are some of the top benefits of taking a franchise Business Loan:

  • Boost in Working Capital
  • Improvement in Cash Flow
  • Available at attractive interest rates and favourable loan terms

3.         How to get approved for a franchise Business Loan?
First, you have to draw a detailed business plan and then approach a lender. This can be an NBFC, venture capitalist or even the franchisor themselves. If you meet the lender’s eligibility criteria for Business Loan, you can submit a loan application. The approved loan amount will be disbursed to your bank account after successful verification.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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