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Franchise Finance

Finance to Franchise Your Business

Franchising could be an excellent option for growing your business with opportunities to expand into new locations, grow your brand further and increase revenue.

In order to be able to expand and grow your business through franchising, you may need to require franchise financing to support your journey.

A franchise business loan can be used to create a franchise package for those who are looking to purchase territories within your franchise. A finance facility can also be used to support the training of new franchisees, marketing to promote your franchising opportunities, consultations from an experienced franchisor/franchise consultant, start-up packages for your franchisees.

Franchise Client Case Study – £30,000 Recovery Loan

One of our clients runs a windscreen repair company and wanted an injection of working capital to help with cashflow and to also invest into franchising their business.

The business now offers a full franchise package which includes initial equipment and tools, uniform package, existing contacts in specific areas, training, business support (and much more) in return for a start-up cost and on-going fees.

Franchise Business Loans

A business loan for a franchise is a lump sum of capital to be used how the business sees best.

The business loan will be paid back in affordable monthly repayments over a determined amount of time.

There are two types of business loans available: Unsecured and Secured Business Loans.

A secured business loan is when an asset is used as security such as a car, stock bond or personal property. As the asset is held as security, if the business fails to pay your loan back, the lender will be able to sell your asset to cover what you owe.

An unsecured business loan is where you don’t have to put an asset up as security for your loan. As there isn’t any security with your loan, a lender will see this as a higher risk as there isn’t an asset to repossess if you’re unable to pay the loan back.

If you’re unable to get an unsecured loan, you may still be approved for a secured business loan.

What can you use a Franchise Business Loan for?

  • Boost your business cash flow
  • Purchase stock
  • Boost your marketing campaigns
  • Fund operating costs
  • Buying out partners in your franchise
  • Employing and training new members of staff
  • Pay VAT bills

These are some examples of what you could use your business loan for however this is not an exhaustive list.

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Franchise Asset Finance

If your franchise business is looking into investing in more assets, be it commercial vehicles, large plant equipment or furniture and laptops, we can arrange hire purchase and leasing finance options to facilitate this.

What type of assets can be purchased?

  • Commercial Vehicles such as vans, HGVs, electric vehicles.
  • Kitchen equipment such as ovens, fryers, hot plates, fridges, freezers.
  • Security equipment such as CCTV cameras, alarms, security fencing, number plate recognition systems.
  • IT equipment such as Laptops, Desktop Computers, CRM, Software.
  • Large equipment such as car washing equipment, industrial equipment, garage equipment.
  • Renewable energy assets such as solar panels, heat pumps, biomass boilers and wind turbines.

You are not limited to those assets listed above, as a broker we work with a large panel of lenders so we’re confident that we’ll be able to find a lender who will be able to provide finance on your specific asset.

Refinancing your Existing Assets

Asset refinancing is when you refinance one or more assets that you already own, and the injection of working capital could potentially be used for the following: expansion, new contracts, new projects and recruitment.

Asset refinance is usually only available on hard assets (equipment, plant, machinery, vehicles) that the business owns in full – it cannot be used against assets that have any existing or outstanding finance arrangements.

What are the benefits of an asset refinance?

  • Protect your franchise from asset depreciation
  • Allows you to make affordable monthly payments.
  • Provides access to working capital that would otherwise have been tied up
  • The finance that you have received from asset refinance can be reinvested into further asset growth

Franchise Invoice Finance

If you’re running a franchise that operates with invoices, you may be experiencing cashflow issues as you wait for your invoices to be paid, especially if customers are paying their invoices late.

However, invoice finance gets you most of what you’re owed immediately, allowing you to focus on running your business and avoiding any late payments on your bills.

Additionally, invoice finance works differently from other business finance solutions as you won’t need to make monthly repayments.

  1. The invoice finance lender will lend the business a percentage of your invoice, providing you with working capital while waiting for your customer to pay their invoice.
  2. When the customer pays their invoice, this money will pay the lender the amount advanced along with any interest that has occurred, and you’ll receive the rest.

Invoice Factoring & Invoice Discounting

Invoice factoring is when your business sells unpaid invoices to a third-party factoring company. They’ll buy your invoices for a percentage of the total invoice value and take responsibility for collecting the invoice payments.

Benefits of Invoice Factoring:

  • Credit control services
  • Credit check potential customers for you
  • Easier to secure for small or early stage companies

Invoice discounting is a form of short term borrowing against your outstanding invoices. With this type of invoice discounting, you maintain responsibility for your sales ledger, payment chasing and invoice processing.

 

Benefits of Invoice Discounting:

  • Invoice discounting is confidential
  • Manage your own credit control and debt collection for customer accounts, helping you build and maintain closer relationships with your customers
  • Invoice discounting is cheaper than invoice factoring
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Property Finance for Your Franchise

Whether you are thinking of franchising your own business or have run your own franchise, you may be thinking about purchasing your own commercial property to operate your business from.

More business owners are looking to own their commercial property as it can be cheaper than renting and once you finish repayments, your business will own the property.

What type of properties can we arrange finance for?

  • High street retail units such as shops, hairdressers, salons
  • Care homes
  • Offices
  • Hotels
  • Industrial units such as a warehouse or factory
  • Pubs, restaurants and cafes

The two main types of property finance commonly used are a bridging loan and a commercial mortgage. However, if you’re looking at building your own commercial property from the ground up, development finance might be the answer.

Furnishing your Franchise Commercial Property

Furnishing your commercial property can be costly whether it’s a modern commercial kitchen, table and chairs for customers or fridges, freezers and shelves for a shop. To preserve cash flow, a finance facility could be the answer.

There are a couple of options available from furniture leasing finance to a business loan, depending on your requirements. Both options are ways of acquiring furniture and fittings whilst making affordable payments and retaining working capital.

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11 Mallard Court, Mallard Way,
Crewe, Cheshire, CW1 6ZQ

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