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    4 Replies Latest reply on Sep 15, 2009 10:22 AM by phanio

    How hard to get financing for franchise?

    robbie51981 Newbie

      I have the chance to purchase a "fast food" sub shop in a large shopping mall for $200,000. The restraunt was remodeled in 2004 with all new appliances and decor that will all convey. The lease is good until 2013 also. Rent in the mall is $4800 a month. I have the past 3 years of statements for the business and last year they had net sales of $245,000, avaraging between $5500-$6000 in sales a week. The area this is in is in an up and coming revitalization of downtown Virginia Beach aka Town Center. Im talking million dollar condos above street shops and top notch businesses. Within the next year they are going to be builind a pedestrian bridge between downtown and the mall itself for increased traffic. I personally cannot see anything but good things come from this. I have been managing for 6 years now so I know I can handle the responsibility. My question is I am 27 years old, have 2 houses (one is a rental) and the other we just purchased a month ago. Ive been looking into this franchise for a while now and this just came out of nowhere or else I would not have bought our current house so quick. I really dont have any downpayment so I would need to get a SBA for $200,000. Am I wasting my time or do you think I could get the loan for this? My fica score is 809 and my wife has a fica score of 788. We have 2 late model cars paid off so we have no bills to speak of except a mortgage. Any help would be appreciated.
        • Re: How hard to get financing for franchise?
          chan175 Newbie
          The best way for you to obtain loan is SBA 7a program. Look for aggressive SBA PLP lenders in your area. You can obtain this information from Coleman Report or call your regional SBA office. They will give you the list of SBA PLP lenders in your area.
          Net sale seems to be very low compare to rent payment but might be okay if seller financial is showing enough debt coverage. You will be needing about 15 to 30% down payment depends on lender but your credit and experience will help. Lenders will not do 100% financing so look for some down payment (cash out on home equity??, gift money)
          You might want to check the lease or talk to leasing agent to have 5 more years or 5 years option period added to the lease to help get longer term on the loan. SBA 7a allow upto 10 years if lease agreement support the term.
          • Re: How hard to get financing for franchise?
            dtominus Wayfarer
            Also choose me as your merchant and i can advance 3x the rent for you ......


            David Tominus
            Merchant resource
            • Re: How hard to get financing for franchise?
              fredosmith Newbie
              The first thing is that it's more important than ever to start sourcing financing option before even choosing the franchise you want to buy.Another is that your credit store is far more important now than it was even a few months ago,And when your loan approved,work on it quickly.
              • Re: How hard to get financing for franchise?
                phanio Pioneer

                As stated - good advice regarding calling a regional SBA office or SBDC office for a list of lenders. Also, will the current owner hold the note if you can come up with 10% or 20% down? This would then require you raising much less money. Also, does the franchisor offer any financing programs? You might want to start here to see what they offer or who they recommend for financing. Lastly, look for a silent or many silent partners that can provide the initial $200K. Many franchises are bought this way. Look for local doctors, lawyers, CPAs or other business people in your area and see if you can pool them together. This might not be your ideal financing method - but, it could easily get you in your first store. I helped a gentleman several years ago do this for his first franchise - now, he has three with two others in the works.

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