9 Benefits of SBA Loans for Franchises

SBA loans for franchises can help get a business off the ground. Franchises tend to be a safe path to go down considering that there are nearly 300 industries in the United States alone that provide this opportunity. 

If you are a business owner reading this, you may be wondering why you should pursue these types of loans. Well, here are some of the biggest benefits that these loans can provide for your business. 

1. Purchasing a Building 

One benefit to this type of loan is that you are allowed to use it to acquire a building. There are a few different circumstances that you can use this for. 

The first is if you are trying to construct the building yourself. You can get an SBA loan and receive business funding for this type of project. Just make sure you have a business plan that lays out how long you expect this construction job to take, what equipment you may need, how much you expect everything to cost, and more. 

Another thing you can use this for is to buy an existing building to open up a franchise there. The only contingency with this is that your franchise typically has to occupy more than half of the physical building. 

So, if you are trying to buy a standalone building or the largest store that is part of a plaza mall, you are likely going to be in good shape here.

2. Using Collateral 

Another advantage to this type of loan is that you are usually allowed to use collateral. For those of you that are not familiar, this is when you put up an asset that lenders can seize from you if you fail to pay the loan back in the timeline agreed upon. 

On one hand, this can be a risky proposition if you are putting up a valuable personal asset such as a house. However, if this is the only roadblock between you and getting a loan because you are not financially qualified, this can be a great way to help you speed up the process.

3. Lower Interest Rates 

A significant challenge for businesses is managing the cost of borrowing. While personal loans can offer a solution, they might not always provide the most favorable terms for a business's needs. SBA loans stand out for their competitive financing conditions. The exact terms, including interest rates, depend on the loan amount and other factors. With SBA loans, rates can be very attractive, sometimes starting as low as 3%. In comparison, some personal loans might have higher rates. The difference in rates can mean substantial savings over the loan's duration for businesses. Opt for the financial solution that aligns best with your business's growth and sustainability. Consider the advantages of an SBA loan.

4. Longer Maturity Dates 

When it comes to SBA loans, most of these types of loans tend to offer long maturity dates. Some may even compare it to paying a mortgage. 

That is because you can come up with terms where you can take a decade or more to pay the loan off a little bit at a time. How long you are allowed to do this depends on what you are taking the loan out for. 

For example, you can only take 10 years to pay this loan off if you took it out to get equipment. However, if you used this to acquire real estate, you can stretch this out to up to 25 years. 

Take advantage of the time that the SBA gives you to pay your loans back.

5. Variety of Loans 

Something else that you should know about SBA loans is that you have a variety of options with these. An example could be that if you only need a small amount of capital to get started, you can take out a microloan from the SBA. 

Then, you can get a loan specifically to increase your ability to export items to your customers overseas. You can also choose between short-term loans to temporarily increase your capital or long-term loans that you can try to negotiate an extended period to pay off. 

The point is that no matter what your specific business needs are, the SBA is likely to have the type of loan that you are looking for.

6. Building an Empire

If you use this type of loan for your franchise, you could have a good opportunity to build an empire in your industry. More franchises tend to mean more brand recognition and more profits for your business if done right. 

An SBA loan could be your ticket to expedite this process.

7. Reliable Backing 

The SBA is one of the most powerful groups in the country when it comes to looking out for small businesses. If they put their seal of approval on a loan for your business, it is essentially telling the rest of the country that they are vetting your business.

8. Peace of Mind 

Getting a loan from the SBA can give you peace of mind when it comes to finances. With the friendlier terms and beginning expansion, you can end up having a lot less stress as a business owner. 

9. Minimal Equity 

Finally, with SBA loans, you do not need to have a ton of your own equity already in your business. While most lenders want to see that you have skin in the game as a business owner, the terms for this can be friendlier with SBA loans. 

If you use the right loan and the right lender, you could end up only having to put a fraction of the equity yourself that is required to run your business.

Consider SBA Loans for Franchises 

These are just a few of the biggest benefits that you get when using SBA loans for franchises. These types of loans only require you to have access to collateral and require only minimal equity. 

You have a large variety of SBA loans to choose from that offer longer maturity dates and lower interest rates than personal loans. 

Do you want to know more? Message us here with your questions.