Franchise Financing and Loans
For interested candidates concerned about financing their Clothes Bin® business investment, there are many ways to secure startup franchise financing.
Financing for Franchises
10-Year SBA Franchise Loans
SBA franchise financing with the SBA 7(A) loan secures you up to $5 million with a 10-25 year repayment term at a prime rate generally ranging from 2.25% – 4.75%. The funds can be used for almost anything startup-related, including the cost of the bins, space and truck rentals, licenses, permits, accounting services, training, computer software, uniforms, and business cards. The only exception is the payment of ongoing franchise fees or royalties. These loans are relatively easy to qualify for, but you’ll need a 10% down-payment on the total cost of the loan to get started.
Third-Party Franchising Loans
Our franchisees can obtain third-party financing through a lender with approved credit. Examples include:
- OnDeck Capital – Short-term loans and lines of credit are available to franchisees who need fast access to cash, even if they’re new to entrepreneurship or lack perfect credit. Loans range from $5,000 to $500,000 with terms of three to 36 months. Interest rates can start as low as 9% but vary up to 99%, depending on the applicant’s qualifications. Funds can be used for anything except for the franchise fee with approval in as little as a day.
- Apple Pie Capital – Apple Pie Capital works exclusively with franchises. Equipment loans start at $15,000, and financing for new units starts at $100,000. Interest rates and terms vary because they work with various lenders, but their industry expertise can be a great asset to new franchise owners or franchisees looking to expand.
- CAN Capital – CAN Capital provides short and medium-term loans ranging from $2,500 to $250,000, subject to equally wide-ranging terms. While the requirements can be lofty, CAN Capital’s fast application process and willingness to work with franchisees who have current debt makes them worth considering.
- Funding Circle – This alternative lender offers $25,000 to $500,000 loans with terms from six months to five years at 4.99 to 22.99% APR. Qualifications include a minimum credit score of 620 and at least two years in business. There is no annual revenue requirement. Applications are quick, easy, and approved in as little as three days. Like CAN Capital, Funding Circle works with franchisees who have other debts, which can be conveniently consolidated.
These lenders also offer affordable franchise equipment financing.
401k business financing, or Rollovers for Business Startups (ROBS), is a common method of funding franchise businesses. With this financing method, you draw money out of your retirement account without incurring an early withdrawal fee or tax penalty. Unlike loans, there is no interest charged to access this capital. You won’t need collateral, business experience, or a credit score. You can borrow up to 50% of your account balance, up to a maximum of $50,000. As you earn money and pay yourself a salary, you can put money back into your account to grow your nest egg. It could take up to three weeks to access cash this way, but you can use the funds for any business-related purpose.
Home Equity Line Of Credit (HELOC)
Homeowners can borrow funds against the equity invested in your home. Use the funds any way you want, including to pay franchise fees. A home equity line of credit can be repaid in monthly installments over several years. Once the loan has been repaid, you may be eligible to borrow more.
Get More Information on Franchise Financing
There are many ways to make your dream of franchise ownership come true. Fill out our form to request more about third-party financing options for franchisees.