Today, many see a “light at the end of the pandemic tunnel.” That encouraging mindset is driving first-time and serial entrepreneurs alike to re-engage and/or accelerate their pursuit of a new opportunity.
Starting and scaling a business, anytime, is not for the faint-hearted. Regardless of market conditions, entrepreneurs must be on top of their game and well prepared. Besides a winning concept, evidence of demand, execution plan, passionate leadership, and trained staff (if applicable), owners need funds.
Inadequate funding is one of the top two reasons why small businesses fail. How does an entrepreneur minimize this risk? Explore funding options as soon as you identify a potential opportunity (and ideally even sooner). Don’t mistake this to mean that “all-it-takes-is-money” to succeed.
Rather, because we’re in a pandemic, funding options for new businesses have changed. Investigate your options ASAP.
Everything seems to be taking much longer. And the marketplace is diverse – community-based brick & mortar banks, specialized small business lenders, virtual banks, private lenders, etc. A compounding factor as to why everything takes longer – ever since the Great Recession, lending processes and regulations are more rigorous. All of this has combined to make the lending process more time-consuming.
On the plus side, there are new options and even incentives available. Given the pandemic-driven economic tumult and market volatility, some lending options have become more difficult to secure. So what can you do? Explore funding options “early,” investigate all options, understand all costs and timing.
Failure to do so could cause delays; thus, you risk missing out on the opportunity you’re pursuing.
The info & insights below were provided by FranFund, one of the franchise industry’s top funding firms.
What Do They Do:
FranFund designs flexible, all-in-one funding plans to help you start or grow your small business or franchise. They offer a loan consultation service to help clients obtain SBA loans and have a 99% success rate in obtaining loans for the people they’ve given preapproval letters to. They also facilitate 401k Rollover/ROBS programs.
Who Are They:
While FranFund is not a direct lending institution, if they were a bank, they’d be in the top 100 most active SBA Lender based on the amount of volume they get approved and funded each year.
FranFund Funding Products:
- SBA Express/Small loans are a great product for service-based businesses that can be operated from your home or small office space. The maximum loan amount for this product is $150,000 borrowed. The timeline currently to close this type of loan once it gets to a bank is 10-12 weeks.
- SBA 7a Loans are great for business opportunities when the loan amount will be a minimum of $150,000 and a maximum of $5M. This is appropriate for brick and mortar opportunities or service businesses with large vehicle/equipment requirements. These loans can be closed in as little as two months, and the timeline greatly depends on the time to obtain a lease for commercial real estate, if required.
- SBA Debt Relief and Incentives: For new loans approved between 2/1/2021 and 9/30/2021, SBA will cover three months of payments and will also waive the SBA guarantee fee (typically 2-3.5% of the guaranteed portion of the loan).
- 401(k) Business Funding: The FranPlan utilizes the IRS Rollover for Business Startups (ROBS) program, allowing you to access retirement savings tax-deferred without the early withdrawal penalties. This can be a great alternative to a loan allowing you to invest in your business debt-free, or you can also use this product in combination with an SBA loan to cover the cash injection that lenders will require.
- 401(k) Rollover/ROBS is the fastest means to funding as the strategy typically takes 3-4 weeks to complete. FranFund has a Safety Net program that allows you to get a head start and move your money at no cost, and then it can lower that timeframe to as little as ten business days if the Safety Net program was already completed.
- Trend Info: While FranFund continues to fund all concepts/industries, they’ve seen an increase in residential & commercial services, pet care, senior care, fitness & children’s enrichment.
To learn more and schedule a free one on one Funding Consultation, please visit www.franfund.com. Tell them I referred you!
FEATURED CONCEPT OF THE MONTH
This month’s featured concept overview:
• Recession resistant
• Every person utilizes the product every day
• $100 billion dollar category
• Executive team and parent company comprised of franchise luminaries
• Serves both residential and commercial customers
• Direct buying power for franchisees
• Low staff count – averages 6 people
• Company teaches how to build equity and create a lifestyle that cannot be achieved with a job
Call or email me to discuss. I’ll run through a few basic steps with you to make sure you’re a fit and do territory checks.
David Busker is the Founder of FranchiseVision and a senior franchise consultant with FranChoice, the premier national network of franchise consultants. David helps candidates exploring franchise ownership to set their criteria and matches them with the perfect franchise, then supports and guides them through due diligence and franchise signing. You can learn more about David at FranchiseVision.