Applying for franchise financing is almost a given for franchisees these days. Starting a franchise location requires plenty of capital, whether you have to invest in a location, equipment or technology. That said, the benefits of financing don’t stop once the opening day comes. Working capital loans can be a huge help both at the beginning and down the road a ways.
How Can Working Capital Help Franchisees?
Conventional franchise financing can give your new location a great start. Small business loans can help fund property purchases, equipment purchases, hiring costs, and other essentials. You shouldn’t overlook the power of working capital, though.
In simple terms, working capital is the money you have on hand to take care of operating expenses. These funds are extremely valuable because of how flexible they are. When you have plenty of capital available, you can cover payroll smoothly, invest in advertising and website development, take care of lease payments, keep up with franchise fees, upgrade technology and make countless other smart moves. These funds are practically the equivalent of a magic lamp for small business owners.
Why Do Established Franchises Need Help With Working Capital?
In the beginning, franchise financing with extra working capital can be a lifesaver. During the first six months to a year of business, you’re still building up your customer base. Sales may start slow, leaving you with more expenses than revenue. When you play your cards right, things get better quickly, but it’s still good to have a safety net to cover essentials as needed.
The great thing about working capital loans is that they don’t stick you with tons of rules to follow. You don’t need to ask for approval before spending the money. You can use funds whenever needs arise or opportunities present themselves.
This is a situation that many established franchisees experience. After a few years of operating, you may notice possibilities for further growth. Maybe you want to attract an experienced manager or invest in additional training for your team. Whatever the opportunity is, franchise financing can help you cover it smoothly.
How Long Does It Take To Apply?
The application process for working capital loans varies depending on the size of the loan, the terms you need, and your company’s credit rating. You don’t need perfect credit. Some options extend working capital based on monthly credit card sales, not your credit rating. You may not need any collateral to qualify.