Fact: 95% of my clients have used franchise loans to help fund their franchise business. Their dream.
Heck, most people who buy franchises these days use franchise financing in one form or another.
Unfortunately, there hasn’t been an easy way to calculate what their payments would be.
Until now.
Try Out My Franchise Loan Calculator, So You Can Figure Your Payments
To Use The Loan Calculator
Type in the amount of money you’re thinking of borrowing to open your franchise business, the interest rate you hope to get, and the length of your franchise loan-in years. Then click Calculate to see your results.
Note: make sure you run different scenarios.
For example, you can shorten the number of years for your loan.
Change the interest rate.
And/or, change the amount you’re thinking of borrowing.
Of course, it helps to know where you stand financially.
Translation: you need to know what your net worth is.
If you already know what it is, great. If not, you need to figure it out before you buy a franchise.
Check Out My Free Net Worth Calculator
Rule of Thumb for Franchise Financing
I tell my franchise buying clients that they should plan on putting 25-30% of their own money in, and finance the rest using a franchise business loan.
For example, if you’re thinking of buying a BrightStar Care franchise in your area, (initial investment ranges from $112,459 to $231,538), and you want to figure $230,000 in total to be safe, 25% of that is $57,500.
So, subtract that amount from the total investment and type in that amount in the Franchise Loan Calculator under “Franchise Loan Amount,” put in an interest rate and term, and click Calculate. That’s your monthly franchise loan payment.
Again, you can play around with the amount you want to finance, but don’t put less than 25% down. Why?
Because today’s franchise lenders want to see you putting skin in the game. And most of them want to see you put in at least 25% of your own hard-earned money.
Once you’ve determined your payment, the next thing you need to do is plug those numbers into your Franchise Business Plan. Why?
So you can see when you’re franchise business will break-even.
And it’s after break-even that the magic begins. Profits.
Yours.
Wait! Check out my other Free Franchise Calculators.
Your Next Steps
With your financing numbers in hand, the next thing you need to do is to put together a solid Business Plan to secure your franchise financing.
But, a business plan isn’t only for getting your franchise loan approved.
It’s to help you monitor the always changing numbers your franchise business is going to have going forward. In real-time.
And if you use LivePlan, your ongoing, always-changing Franchise Business Plan is instantly available.
But why should you have an ongoing Franchise Business Plan in place?
So you can:
- Track financial performance against projections
- Help identify potential cash flow issues early
- Enable better budget planning and resource allocation
- Assist in monitoring and controlling your expenses
And more.
It gets better.
What if you’re ready to expand your franchise business?
You can plug-in your numbers for your second location. And your third…
So, check out LivePlan. It comes with an industry-leading 35-day money back guarantee. And, it does it all.
Small Business Lenders to Contact
Now that you know you’ll probably need to finance a portion of your franchise dream, you need to find a lender. Which isn’t always easy.
With that in mind, several of my clients have used a portion of their retirement plans to set up their franchise businesses. Is it safe to do that? Is it right for you?
On Getting a Traditional Small Business Loan
It’s a fact that less and less banks are lending money to people who want to open a franchise in their area. So, some finance-related creativity may be warranted.
For instance, I haven’t used this method of franchise business funding myself, but it peaked my interest. Check out this video that explains it.
(This webpage is owned and operated by The Franchise King®, Joel Libava. If you click on a link, assume that it’s an affiliate link and that I may be compensated if you purchase the product/service.)