Expanding Options in Franchise Financing

RadioShack recently announced plans to offer franchising opportunities for its small electronic stores in the country of Afghanistan. Other companies are expected to follow suit, expanding the market for their products and services in this embattled part of the world. These new franchise opportunities are expected to provide much needed commercial activity in the war-torn country and are timed to coincide with the withdrawal of the bulk of U.S. troops from Afghanistan in 2013 and 2014. Franchising arrangements are seen as a way to bolster infrastructure development and provide employment opportunities in depressed areas; additionally, the franchise model provides solid support for new business owners in setting up their establishment and achieving financial success with their corporate venture.

Financing the franchise

Most franchisees in Afghanistan are private investors with significant sums of cash to invest in these new business opportunities. Closer to home, potential franchisees may not have similar cash resources to draw upon for their initial purchases. Unfortunately, obtaining finance arrangements through traditional lenders may be difficult for first-time buyers in the current economic conditions. Finding the right funding solutions can help prospective small business owners manage the financial aspects of franchise acquisition. Buyers should consider a number of alternative funding arrangements in order to achieve their franchise ownership goals.

Collateralized loans

Some franchise purchase arrangements may require collateral. For small business owners looking to add a franchise to their existing corporate portfolio, business financing options for franchise acquisition may include the following:

• Accounts receivable loans
• Inventory financing loans
• Loans collateralized by real estate, buildings, equipment and other items of value

Newcomers to the franchise field may lack the normal business collateral needed to acquire funding through traditional channels. In these cases, it may be necessary to seek alternative funding methods to purchase the franchise and to manage any attendant expenses to the acquisition. Borrowers may be able to acquire the necessary capital through the following methods:

• Business to business financing
• Private equity investment groups
• Small business startup loans
• Venture capital companies

In some cases, the U.S. Small Business Administration may offer loan programs or grants for small business entrepreneurs who qualify.

Finding the right options

Some aspiring franchise owners may find ready financing through the traditional lending marketplace. For others, however, thinking outside the box may produce better results and allow a greater degree of flexibility in finding a lender quickly. Online business loan facilitators like CNF Exchange can allow borrowers to connect directly with lenders with a single loan application. Lenders benefit by acquiring a wider range of leads and potential borrowers for their financial products, while borrowers acquire the luxury of choice in the competitive lending marketplace.

CNF Exchange offers an innovative platform and a wide range of services for borrowers in the market for franchise financing or other business loan arrangements. For companies who may find it difficult to get a business loan in the traditional marketplace, CNF Exchange can provide new avenues of opportunity for obtaining the needed financing quickly for almost any business need.

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