Securing Funding to Start a Home Care Franchise Operation

Posted: October 1, 2014

Franchise Money — Image Source: freedigitalphotos.net

With the ongoing economic recession, banks and other lending institutions have been more reluctant to grant loans to prospective small business owners, making obtaining funding increasingly difficult. Many factors go into a lender’s decision to lend money to a prospective home care franchise owner, including the reputation and history of the franchisor.

What are a person’s options for obtaining funding? Here we look at several possibilities:

Small Business Administration (SBA) Franchise Loan Program –– The SBA is a government administration that, among other things, helps prospective small business owners obtain funding. The SBA has several loan programs, including one in which lenders work with the SBA to provide small business loans on a deferred basis.

Angel Investor –– Angel investors (also known as business angels) are affluent individuals who usually provide their own money (unlike venture capitalists, who pool and invest money from several investors) to help a person or group start a business. Angel investors generally require a high return on investment because the risk of this type of investment is so great.

Friends and Family — Friends and family can be a great resource for funding without the restrictions and red tape that often come with borrowing from lending institutions. However, borrowing from friends and family has the disadvantage of potentially straining or even forever altering personal relationships. Additionally, confusion about interest rates, management, repayment, etc., can cause confusion.

Crowd Lending — Through websites like fundable.com prospective, franchise owners can create a profile and a compelling case for why funders should support them. These sites help streamline fundraising by allowing people to promote their business idea online and collect funding all in a single place.

Prospective franchisees that are unable to obtain needed capital to start a business through traditional lenders like banks and credit unions have many alternative options for obtaining funding. The advantages and disadvantages of each potential source of funding should be weighed carefully.

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