I need a loan to buy a franchise. What must I do before approaching a bank?

This checklist should help.


When approaching a bank for finance its very important to complete the following checklist:

  • Are you approved by your franchisor? Banks will not approve a loan unless the franchisor has approved you to be a franchisee.
  • Do you have any judgments against you regarding your credit history? Make sure you disclose any to the bank.
  • Have you secured a site for your franchise? Whether this is on your own or with the help of your franchisor – you need to have a location lined up and it needs to be viable.
  • Do you have a comprehensive business plan that you understand and can discuss? While it’s possible to have a professional draw up a business plan, a bank needs to see that you have the financial knowledge to operate and grow a business successfully.
  • Do you have the required unencumbered capital? Most franchises will require a percentage of unencumbered capital. This is at least 40% and it has to be your own – not borrowed from family or friends.
  • Do you have assets to act as security?
Ethel Nyembe
About the Author
Ethel Nyembe has had a varied career ranging from Public Relations and Media to Banking. Starting with a media career that included radio and television (presenting, scriptwriting and producing) at the South African Broadcasting Corporation (SABC), she moved on to a position as an Account Executive in newsprint at Business Day. Ethel wrapped up an eleven-year media career as the Deputy General Manager for Sales and Marketing for Sunday Times in 2004. 2004 marked Ethel’s introduction to a career in banking, where she began a six-year tenure at First National Bank. In the first quarter of 2010, she joined Standard Bank, where she is currently the Head of Small Enterprise, Retail Banking, South Africa. Ethel is passionate about the entrepreneurial spirit South Africa holds, and has served on several business boards, as well as on the boards of co-operatives in the Johannesburg city centre and Economic forums in Gauteng. She has a keen interest in sport and the social upliftment of the community.

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