Revenue-Based Financing for a Franchise
As one of the leading revenue-based financing providers, Mantis Funding will work with you to create a custom-made plan for your success to support your franchise business dreams.
What You Need To Know About Funding Your Franchise
Maintaining a business can come with challenges. Unexpected expenses like renovations or repairs could hamper your sales if you don’t handle the issue quickly enough. Don’t worry, though: Mantis Funding is here to help. If you’re unfamiliar with franchise funding, allow us to lead the way. Needless to say, opening up a franchise can be expensive—that’s where we come in. We’ll help cover those out-of-pocket expenses and other fees that can total in the thousands. Don’t let these expenses stand in the way of securing your dream business!
Options for Funding a Franchise Business
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.
How Does Obtaining Franchise Revenue-Based Financing Work?
You may be asking yourself, “How does obtaining franchise revenue-based financing work?” We aim to create a smooth and efficient process so you can receive franchise funding with as few bumps in the road as possible. Check out an overview below and the simple steps involved.
- Apply Online: Simply fill out an application for funding. Let us know a few details about your business and you’ll hear back from us shortly. Plus, there’s no fee to apply. You can receive franchise financing in as little as one to three days after you submit an application.
- Speak to a Representative: Our representatives will walk you through all of the required documentation you need to provide in order to process your application. We’ll need standard information like proof of identification for the business and the business owner. We will also need documentation of revenue and a few other key documents.
- Finalize the Process and Access Funds: Once approved, you will receive a funding agreement outlining all of the important details and applicable fees. Our underwriter will be able to answer any of your questions. Lastly, you’ll be able to access funds and get back to cultivating your business.
Frequently Asked Questions About Financing a Franchise
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.
How much financing can a franchise qualify for?
At Mantis Funding, we are able to provide franchise funding anywhere from $5,000 to $500,000 to meet a wide array of customer needs.
What are the 4 types of franchising?
When it comes to franchise financing, there are four flexible paths that are specific to the scope of the franchising involved.
Single-unit franchising allows the franchisee to open and operate a sole franchise unit.
One step up from that would be multi unit franchising, which allows the franchisee to open up more than one franchise unit, typically on a predetermined schedule.
An area development franchise consists of an agreement where the franchisee can open up multiple units in a specific location. Oftentimes, the franchisee receives exclusive rights in a particular area.
A master franchise agreement grants the franchisee rights to open up units in an outlined territory and sell franchises to others. This option is often used when building out franchises overseas but requires you to train and support new franchise owners.
Can I obtain financing if my franchisor is not currently a partner of Mantis Funding?
Even if your franchisor is not currently a partner of Mantis Funding, we’d still like for you to reach out so we can quickly make a determination and see if you qualify for funding.
Can banks provide loans to franchises?
Certain franchisees work directly with banks to secure commercial loans, however, there are some drawbacks to working with a bank, including slow turnaround times and requirements for good credit scores. Most of our customers are able to receive franchise funding in as little as one to three days after they fill out an application while approval for a commercial loan from a bank may take weeks to months.
What are the requirements to get funding for franchises?
When it comes to securing funding for your franchise location, most lenders have a list of requirements you’ll need to meet. They may require a good credit score, yearly revenue, age of company, business plans for funds and tax returns.
At Mantis Funding, our eligibility requirements are simple:
- Your business has been operational in the U.S. for at least 6 months.
- You own at least 50% or more of the business.
- You can pass a minimal credit score check — low credit scores are ok!
If you meet these basic requirements, then we invite you to fill out an application for funding so our representatives can get started on the approval process.
What’s the difference between loans and revenue-based financing?
Revenue-based financing is an alternative form of financing that exchanges working capital for a set amount of the business’s future revenue streams. Various sectors such as medical, retail, and automotive industries can all benefit from revenue-based financing when they need to grow their business in a short amount of time — all with fewer regulations than are commonly associated with traditional lenders. Companies don’t have to give up any equity either, as is typical with venture fundraising.
The amount of financing that a business qualifies for will ultimately be based on the total monthly revenue that it generates. Repayment structures are either daily or weekly, and they are directly debited from the business’ bank account.
View our How it Works page to learn about the three main differences between a traditional business loan and revenue-based financing.
Other Industries We Service
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.
More Resources about Franchise FundingView all
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Get in Touch
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