When you want to open a franchise in Rhode Island, you may not have enough money available to you to finance the upfront costs. Today’s franchise owners finance their franchises using a number of different sources, and you may find that you have several options available to you in terms of how to finance yours.
Per U.S. News and World Report, one of the first things you may want to do is ask the franchisor you plan to partner with if it has a preferred lender. Your franchisor may also offer a financing program of its own. If not, or if it does but you still want to explore your options, you may want to consider trying to get obtain financing from the following.
The Small Business Administration
The SBA maintains three main programs that offer business loans: 7(a), 504 and microloans. There are different risks, benefits and drawbacks associated with each type.
Conventional business loans
Typically backed by banks or credit unions, conventional loans are traditional loans that may be available to some borrowers. Unlike SBA loans, there is no federal backing on these loans, so they are riskier for lenders and therefore harder to get.
Home equity loans
Some borrowers use their home equity to obtain financing for a franchise. However, there are certain risks involved, such as the risk of foreclosure, if you finance your franchise through a home equity loan and then fail to stay on top of your loan payments.
While these are some of the common financing sources today’s franchise owners use to get started, this is not an exhaustive list of all possible lenders.