As both businesses and consumers in Atlanta are likely well aware, the economy in recent years has not been robust. That’s made it tough for those seeking loans or financial assistance to get the funds they need.
The same may be true of those looking to launch franchise businesses. Recent reports indicate that lenders are not making it easy to secure loans. The idea of starting a franchise business operation is very appealing in today’s tough job market. Many people who are unemployed are looking to franchising as a way to start fresh.
One recent example of this lending crisis is the story of a man who wanted to start a franchised urgent care facility. First, the man suffered through his home equity line of credit being frozen. Second, he couldn’t get a bank to issue him a loan. It took over a year for the franchising hopeful to find a solution.
What the man found is that lenders are not completely open to new franchise buyers and may deny requests for financing based on lack of experience. In this man’s case, the banks shied away because of the specific nature of the franchise opportunity – an urgent care center.
He had the money to get the franchise, but he needed $1.2 million in additional working capital. He finally cobbled together what he needed by obtaining a loan from the Small Business Administration for $575,000 and tapping his savings and 401(k) account. The amount that he needed in total was to cover capital, construction, and equipment costs.
The issue of financing for those wanting to start a franchise in Atlanta goes beyond just lender difficulties. In today’s economy, credit scores do not amount to what they did in years past, so entrepreneurs and franchise hopefuls have to bring more creative insight to their planning. That may be facilitated with help from a legal professional with experience in the franchise market. Ultimately, the process of starting a franchise may present challenges and complexities, but it can be successful when the right tools are employed and all the available options are considered.
Source: The Boston Globe, “Getting a loan to open a franchise is getting harder,” Joyce M. Rosenberg, AP, Aug. 30, 2012