Depending on your familiarity with business loans, securing financing for your franchise purchase could seem like just another step in the process of opening a business, or a stressful roadblock. If you’re concerned about obtaining a loan, don’t be. Banks and lenders are lending again and helping to fuel economic growth. Even when many lenders were tightening the reins on lending during the recession, Great Clips lending partners continued to provide loans to our expansion-minded franchisees. Before applying for a loan, the U.S. Small Business Association (SBA) recommends that you gather some necessary documentation to prove that you’re a qualified candidate. (Note: Great Clips franchisees don’t need to focus on financing until a salon location is found.)
Documentation Typically Needed for Loan Applications
Although each lender may ask for different documentation, the SBA has gathered a list of commonly requested documents for the loan application process. The SBA recommends gathering numerous items before applying for a loan, including personal background information, credit reports, tax returns, financial statements and more.
A good franchisor will already have an established relationship with a lender that can be utilized by franchisees. This can help expedite the process as the lender will already be familiar with the business and Great Clips is no exception. Great Clips has an established relationship with Wells Fargo SBA Lending (they offer a proprietary program to Great Clips franchisees with just 10-15% down) and FranFund, among other lender partners. Having these relationships established is a great advantage for franchisees. Of course, franchisees can also secure financing from local banks or other national lenders.
Applying for a loan may seem like a lot of work, but remember that you aren’t alone in this. Your franchisor can offer assistance and the lender will also be working with you to make sure you have all the necessary documentation. As a member of a franchise community, you also can ask for advice from fellow franchisees that have already gone through the process.
Here are a few articles that are worth the read before you start the financing process for your franchise:
• How to Finance a Franchise
• Finding Franchise Funding in a Crunch
• Franchise Start-up Guide