Applying for a franchise loan can be complex. However, there are some very simple steps you can follow before completing the application, which if undertaken can really assist with a successful outcome.
Early accounting – keep all your important financial accountancy commitments up to date and whenever possible try to file your annual accounts early.
Maintain a healthy business bank account – make sure your franchise has a business bank account and that all financial transactions are handled through this. Always try to ensure the account looks healthy and try not to fall regularly into your overdraft. Even if you take payment via cash, ensure it is probably accounted for and paid into your business account.
Positive credit score – monitor your franchises credit score and ensure that it is an accurate account of your business. As part of a finance application a lender will check your credit score so these need to portray your business positively. If for some reason the credit score is low take the necessary steps to improve this.
Plan, plan, plan – don’t leave anything to chance, make sure you plan well in advance for anything you need. The application process could be lengthy depending on the specific funding needed, so make sure you allow adequate time. Try to maintain accurate cashflow forecasts. By being able to plan and apply in advance you can take your time to review all the options available and won’t have to rush the decision-making process.
Avoid too many changes – lenders like to see stability especially with ownership and shareholders. It is important to keep a stable operating structure for the franchise with minimal to no changes. An application could be affected if the management structure changes within the previous 12 months.
Finally, one of the best options to successfully secure a franchise loan is to utilise the services of a broker. A broker will work with you to complete the initial fact find, can look after the entire application process (saving you time, money and resources) and hand select the right providers that will match your specific franchise needs.
If you have any questions, then we have a team of experienced franchise finance specialists available to help. Please call us on 01993 706403 or e-mail hello@ngifranchisefunding.co.uk.