More franchisors are offering financing programs to potential franchisees as a result of tight credit markets. If a bank loan or SBA guaranteed loan is unattainable, consult the franchisor as a potential source for capital.
“There are also alternatives to banks like community development corporations who may charge a higher rate, but are willing to take a bit more risk,” Otte said.
Otte said private equity lenders or “angel investors” may be an option as a last resort.
“Venture capital money is financing sponsored by folks with capital to invest,” Otte said. They are looking for a quick turn on their money and usually want sufficient equity in the company as to gain control.”