Revenue-Based Financing for a Franchise

We wanted to give you a better understanding of the types of franchise funding options that are available to you today. Check out several franchise financing options below:

• Talk to Your Franchisor: Start with your franchisor. They may be able to point you in the right direction if they’ve worked with previous partner lenders in the past. Plus, your franchisor may offer financing options as well. Just be sure to review all of your options before making a final decision.
• Small Business Association (SBA) Loans: SBA connects small business owners to reputable lenders that generally offer lower interest rates and better agreement terms. The different SBA loans include 7(a) loans, 504 loans, and Microloans. 7(a) loans are most commonly used by new franchisees. Microloans are great for financing equipment and machinery while 504 loans have a fixed rate over a long period of time.
• Commercial Loans: Commercial loans are given through the franchisee’s preferred bank. They typically require the franchisee to have good credit scores and may take weeks to process.
• Personal Assets: When opening up a franchise, some people choose to pull from their retirement, savings account, or even take out a home equity loan. This can be risky, as it can result in the foreclosure of your home.
• Rollovers as Business Startups (ROBS): ROBS financing allows you to pull from your retirement savings without paying taxes on them. This can be a complicated and risky process, as you’re putting your retirement funds in jeopardy in hopes that your business flourishes.
• Personal Connections: If you’re not able to secure a commercial loan due to poor credit, you may think about asking your family and friends for a loan to invest in the growth of your business.

Securing funding is an essential part of the franchise ownership process, and Mantis Funding is here to help. While specific requirements may vary depending on the franchise you choose and your state regulations, here’s what you’ll need to apply for franchise funding:

Financial Requirements:

• Personal and Business Financial Statements: This includes your personal income tax returns, business plans (if you have an existing business), and profit and loss statements (if applicable).
• Credit Score: A strong credit history demonstrates your ability to manage finances responsibly.
• Net Worth: Franchisors will want to see a healthy net worth, which is the total value of your assets minus your liabilities.
• Liquid Assets: This refers to readily available cash or assets that can be easily converted to cash. Liquid assets are crucial for covering initial startup costs and operating expenses until your franchise becomes profitable.

Business Documentation:

• Franchise Disclosure Document (FDD): This legal document provides key information about the franchise opportunity, including fees, financial performance data, and risk factors. Reviewing the FDD is essential before applying for funding.
• Business Plan: A well-crafted business plan specific to the chosen franchise demonstrates your understanding of the market and your approach to running the business.

Personal Information:

• Resume or Business Biography: Highlight your relevant experience and qualifications for operating the chosen franchise.
• Government Issued ID: A valid form of identification will be required.

Please note: This is not an exhaustive list, and additional documentation may be required depending on the specific franchise and lender.

Mantis Advantage: At Mantis Funding, we understand that navigating the financial aspects of franchise ownership can be overwhelming — that’s why we work closely with you to ensure you have all the necessary documentation in order and guide you through the entire funding process.

A strong credit history is a positive indicator for franchise funding and lenders use your credit score to assess your ability to make your funding payments, on time and in full. Generally, a minimum credit score in the mid-600s is preferred by most lenders. However, some lenders may offer more flexibility (or may request more documentation to support your application).

Can I Apply for Franchise Funding with Bad Credit?

While a strong credit score is ideal, it’s not always necessary. Here at Mantis Funding, we understand that financial situations aren’t one-size-fits all, and are committed to helping aspiring franchise owners achieve their specific goals.

• Alternative funding options: We offer a variety of programs and work with a network of lenders who understand the unique challenges of aspiring franchise owners. This means we can explore alternative funding options for those with less-than-perfect credit.

Lenders may look into a few details, in addition to your credit score, including: 

• Business experience: A strong track record of success in business can help buffer the impact of a lower credit score.
• Down payment: A larger down payment can improve your chances of securing funding and demonstrates your commitment to the franchise opportunity.
• Franchise choice: The financial strength and credit score requirements of the specific franchise you choose can also be a factor in determining your options.

Mantis Advantage: Our team of experts will work closely with you to understand your financial situation and develop a personalized funding plan that leverages your strengths.

As an industry insider, we at Mantis Funding understand the intricate dance between franchisor expectations and franchisee financial needs. Securing the right funding partner can be the difference between a smooth launch and a major roadblock. Choosing Mantis Funding to means you gain a strategic partner with:

• Streamlined process start to finish: Our application process is designed to be fast and hassle-free, minimizing disruptions as you build your business. We handle the complexities of securing funding, allowing you to focus on big decisions like securing prime locations and hiring top talent.

• Faster franchise growth: We understand the importance of swift access to capital. Our streamlined processes and efficient decision-making allow you to secure funding quickly, keeping you ahead of the curve in a competitive market.

• Support system for success: Our commitment extends beyond simply providing funding. We offer ongoing support and guidance throughout the funding process and beyond. We’re here to help you navigate financial complexities and ensure your franchise thrives in the long run.

Here’s what truly sets Mantis Funding apart:

We take the time to understand the nuances of your chosen franchise opportunity and develop a customized funding plan that aligns with your specific goals and budget. Clear communication comes first and we will walk you through all the details of your funding options, ensuring you make informed decisions with confidence.

Have questions or concerns you want to share? Our team is committed to providing exceptional customer service. You’ll have access to dedicated representatives who are readily available to answer your franchise funding questions and support you every step of the way.

We understand that time is money, especially when it comes to launching your franchise business. At Mantis Funding, we have a streamlined and efficient funding process designed to get you the capital you need quickly.

Here’s a breakdown of the typical timeline for securing franchise funding with Mantis:

• Application & documentation: Our application process is designed to be quick and user-friendly. Once you’ve submitted your application and all required documentation, our team will work diligently to review your information.
• Underwriting & approval: Our experienced underwriting team will thoroughly evaluate your application and business plan. This typically takes 2-3 business days. In some instances, depending on the complexity of the funding request, this process may take longer. 
• Funding timeline: Upon funding approval, closing documents will be prepared for your review and signature. Once signed and returned, funds are typically dispersed within 5-7 business days.

Some factors may impact the overall turnaround time:

• Completeness of your application: Ensure you submit all required documentation promptly to avoid delays.
• Complexity of the funding request: Unconventional funding structures or large funding amounts may require additional processing time.
• Third-party verification: Verifying information with banks or other institutions can add a few days to the process.

Getting started is easy!

Don’t let the question of the funding timeline hold you back from pursuing your franchise dream. Contact Mantis Funding today! Our team can discuss your specific needs and provide a more precise estimate on your potential funding timeline.

Franchising funding from Mantis Funding can help bridge that gap, but it’s important to understand both the advantages and disadvantages before making a decision.

Pros of franchise funding:

• Overcome funding hurdles: Many aspiring franchise owners lack the initial capital to cover startup costs, equipment, and inventory. Franchise funding provides the resources needed to get your business up and running.
• Faster launch: Securing funding through a dedicated franchise lender like Mantis Funding can be a faster process compared to traditional bank fundings. This allows you to launch your franchise and start generating revenue sooner.
• Expertise and guidance: Mantis Funding offers expertise in the franchise financing landscape. We can help you navigate the complexities of funding options, understand funding terms, and develop a solid financial plan.
• Focus on your business: By handling the funding process, we free you to focus on crucial tasks like building your team, securing a location, and marketing your franchise.

Cons of franchise funding:

• Debt burden: Franchise funding typically involves taking on debt, which requires payment plans with interest, creating a financial burden if your franchise doesn’t perform as expected.
• Loss of equity: Depending on the funding option, you may give up some ownership equity in your franchise to secure funding.
• Terms and restrictions: Funding agreements often come with specific terms and restrictions regarding how you can use the money and operate your business.

Before making a decision:

We strongly encourage all potential franchise owners to conduct thorough research before making any financial commitments. Here are some important considerations:

• Carefully review the Franchise Disclosure Document (FDD): Know the risks and potential rewards of franchise ownership, including financial performance data for existing franchisees.
• Develop a detailed business plan: A well-crafted business plan specific to the chosen franchise demonstrates your understanding of the market and financial projections.
• Explore all funding options: Consider alternative funding sources such as personal savings, fundings from family or friends, or crowdfunding platforms.
• Seek professional advice: Consult with a financial advisor to understand the financial implications of franchise funding and ensure it aligns with your financial goals and risk tolerance.

Mantis Funding is here to help!

Whether you decide to utilize franchise funding or pursue revenue based funding options, Mantis Funding can be a valuable resource. We offer free consultations to discuss your specific situation, answer your questions about franchise financing, and help you navigate the path to franchise ownership.

Finding funding to expand your franchise might seem like a daunting task. Mantis Funding is here to answer all your questions and provide you with hand-tailored revenue-based financing options.

We service a wide variety of industries, including the retail and automotive sectors, as well as both medical and liquor stores. Industries range from trucking businesses to nightclubs. We also service other industries that are not included on this list and invite you to fill out an application for funding so our representatives can reach out to you. We understand the challenges of the market and cash requirements for business owners and will be able to walk you through every step of the way.