Tuesday’s Southeast Michigan Franchise Business Network on new funding sources for franchisees featured an esteemed panel, including: Jerry Jones of Funding Solutions, who helps to meet the financing requirements of franchisees; Steve Blahunka, who leads franchise lending for Merrill Lynch; and Steve Terharr, managing member of Achieve SBA, a firm that provides lending expertise to community financial institutions and business owners.
The panel reminded the audience of times when the lending environment was not as hospitable. Fortunately, that has all changed. Lenders can now take pride in helping franchisees finance their dreams of becoming independent businessmen and women.
Having recently attended the Alliance of Commercial Loan Brokers conference, Jerry was happy to relay a positive outlook for lending. For the first time in a long time, there is more money available via more lenders, brokers and suppliers. The variety of loan products also has expanded, as have the range of interest rates.
Here are some of the products the panel discussed as potential options for franchisees:
- SBA Loan: Traditionally, this has been a good option, especially for start-ups. At up to twenty years in length, it’s long enough to weather a business cycle. However, one drawback is that it is heavy on the paperwork.
- Loan Management Account: Merrill Lynch offers this for business financing. The account can be collateralized by 401K investment funds or other qualified assets. At that point, the depositor retains management of the investments, even though they are being used as collateral.
- Merchant Cash Advances: These are available for stable, revenue-producing businesses, perfect for six- to twelve-month needs.
- Peer-to-Peer Loans or Crowdfunding: These are projects that are made public for interested investors.
- SBA/Patriot Express Loan: These are designed specifically for veterans.
- Conventional Loans: These are available to established franchisees.
The good news is that adaptable loans are available to meet individual business needs…and competition among lenders is increasing. All of this bodes well for franchisees that are just starting out. But, as always, the path to success is more clear for those who do the necessary due diligence in research and obtain wise council.
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