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?