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You have found the best franchise for you and are really excited about its future and your new business. However, how are you going to pay for it? Many franchises require a significant investment and a large amount of liquid money that many individuals don’t have. Fortunately, there are a lot of financing options available to help you finance your franchise business opportunity.

Please keep in mind, however, that you should consider financing your franchise before you actually get your heart set on a particular franchise. The reason why is that financing can be a challenge and is the most important thing you should consider before actually opening a franchise. So, spend some time researching how to finance your franchise business opportunity to get a better understanding of how the entire process works.

Your Finances

First, you need to determine your financial situation. If you are not in a situation where you can afford to embark on a new business opportunity that may have cash flow issues in the beginning, then you should reconsider buying a franchise at this time. If you are current on all of your bills, have more holdings than debt, and make enough money to live on comfortably while saving then you may be prepared financially for a franchise. If not, then you might want to get your finances in order first. If you are doing well, and have some savings to invest, then a franchise may be a great opportunity for you.

Financing

There is a lot of information that you will need to provide in order to get financing. This includes your financial records from loans and debt payments to account balances and tax returns. Make sure all of this information is up to date and well organized before submitting it for financing approval. The more financial information you provide the easier it will be for lenders to determine your financial situation and subsequent financing options.

Financing by Franchisor

When you buy a franchise many times the franchisor will offer some percentage of financing to help you get started. The franchisor you are working with will heavily influence the financing options. Keep in mind, however, that just because you are buying a franchise and decide to go with franchisor financing the application process will not be any easier or more lenient. Also, you will need to invest some of your own money in the franchise because 100% franchise financing is highly uncommon.

Additional Financing

A Small Business Administration loan is a great option for additional financing for a franchise. Also, most banks are willing to finance successful franchises because they have a proven business model. Private investors may also be another option for financing your franchise opportunity.

By devoting extra caution and time, commercial borrowers can avoid serious business opportunity investment financing mistakes. The most obvious benefit will be to reduce the potential for critical commercial loan problems, both now and throughout the life of the business financing terms arranged.

A key factor that distinguishes business opportunity financing from other forms of business financing is the lack of commercial property ownership. Although the transaction will usually involve a long-term lease agreement, the buyer is acquiring a business that does not include real estate in the purchase price.

The two mistakes described in this article are more typical than expected by most commercial borrowers. While we will not be addressing all possible business opportunity financing problems in this article, we will include two of the most severe issues to anticipate and avoid.

Length of Business Financing -

A common mistake when acquiring a business opportunity is to finance the acquisition with business financing that expires within two to five years. One reason for this occurring is the failure to negotiate a longer-term lease, since it is typical for financing terms to expire with the lease.

A viable solution is to insist on a lease that is at least ten years long. This will facilitate business finance terms that can typically be for a ten-year period. One key factor that limits business opportunity financing to a ten-year period is due to the absence of commercial real estate collateral.

Use of Excessive Seller Financing -

Although nominal seller financing (such as 10-20%) can be helpful to a business financing transaction, attempts to finance either entirely or primarily with seller financing are generally inadvisable. There are several different issues which can result in this being a serious mistake.

If a seller is providing most or all of the business acquisition financing, a formal appraisal might not be obtained. While this appears to offer the advantage of saving the cost of such an appraisal, it also eliminates an important method of determining if the purchase price is appropriate. It is also not uncommon for a seller to have acquired a business appraisal that is used to substantiate the purchase price for the business they are selling. An appraisal financed by the seller is not likely to be an independent business value estimate.

An additional restriction when using excessive seller financing is that it typically will cover a period of three years or less. This will necessitate refinancing within a period that is not always practical to do so. A loan history up to 48 months will be required by some lenders prior to refinancing a business opportunity loan.

Solutions and Strategies for Avoiding Business Opportunity Investment Loan Mistakes -

Business borrowers should thoroughly discuss options with a business financing expert before proceeding with investing and financing programs. These efforts will be worthwhile since the potential business finance mistakes described above can be overcome successfully. Borrowers should seek out advisors capable of providing candid solutions in their efforts to obtain a better picture of complicated business opportunity financing possibilities.

FHA loan programs were created to help increase homeownership during the great depression and can help almost any homebuyer purchase a home regardless or income or credit. With the flexibility inside the programs no other home loan program can compare.  FHA mortgage programs makes buying a home easier and less expensive than other types of home loan programs. Here are just some Examples of how FHA can help you buy a home,

Minimal Down Payment and Closing Costs.

·      Down payment less than 3% of Sales Price with 100% financing options available.

·      100% Financing options available

·      No reserves or required.

·      FHA regulated closing costs.

·      Seller can credit up to 6% of sales price towards buyers costs.

·      Easier Credit Qualifying Guidelines such as:

·      No minimum FICO score or credit score requirements.

·      FHA will allow a home purchase 2 years after a Bankruptcy.

·      FHA will allow a home purchase  3 years after a Foreclosure. 

·      Easier Debt Ratio & Job Requirement Guidelines such as:

·      Higher Debt Ratio’s than other home loan programs.

·      Less than two years on the job is allowed.

·      Self-Employed individuals o.k.

How FHA Loan Programs Work?

FHA does not fund loans to homebuyers; instead FHA insures loans made by private Florida mortgage companies. The FHA insurance provides protection against mortgage defaults. FHA loans have loan limits depending on the Florida county and city. Because FHA loans are insured lenders can give applicants betters terms on the mortgage being offers. FHA insurance saves borrowers money and allows first time and move up[ buyers to purchase a home with as little as three percent down.

What kind of home can I buy?

.

Ø        Single family homes

Ø        Duplexes

Ø        Tri-plex

Ø        Four-plex

Ø        Condos

Ø        Townhouse

Ø        Mobile homes

Ø        Modular homes

Note townhomes and condos must be at least 51% owner occupied

What other FHA programs are there?

FHA reverse mortgage – allows homeowners 62 or older to tap info equity built up over the years, which allows seniors to use the equity in their homes to get money for their retirement living expenses.

FHA 203K – The FHA 203k it is an important tool for community to purchase and rehabilitate a home all in once financing program.

There is more to buying your home then the monthly house payment. Why not ask for an FHA loan that will help you buy your house and keep it too? The next time you need a home loan make sure you ask for an FHA loan.

www.FHAmortgageprograms.com

Buying a business investment without real estate requires specialized business opportunity financing. Although this kind of business financing is available, there are several potential problems which should be anticipated and avoided by prospective buyers.

In order to buy a business, a commercial borrower is likely to need business financing. If the business includes commercial real estate, the borrower will need a commercial mortgage. If the business purchase does not involve real estate, a business borrower must use a business opportunity loan.

When obtaining a business opportunity loan, borrowers will discover that many lenders simply do not provide business loans that do not include real estate as part of the business purchase. There are several other important business financing issues to analyze prior to buying a business without commercial property.

The level of interest for buying a business opportunity investment has increased due to the reduction of activity involving residential real estate investing. However, because there are so many critical differences between financing residential real estate and business financing, it is important for potential business owners to educate themselves before proceeding.

This summary is designed to address the unique business financing requirements involved when real estate is not involved. Our suggested approach to business opportunity financing is provided below.

Prospective business owners should begin business opportunity investment financing plans by formulating a realistic assessment of cash available for a down payment and desired maximum business purchase price. In most business financing scenarios, a total down payment approximating 25% of the purchase price is advisable. Usually seller financing is permissible for a portion of the down payment, but a potential buyer generally needs to plan on investing a minimum of 10% or more of the purchase price from their own funds even if the seller is providing 20% or more.

Purchasers should evaluate whether a Small Business Administration loan is relevant for their particular business financing and investing circumstances. This step is both important and somewhat complicated, and the involvement of an SBA loan expert is strongly advised. Among the issues to explore are whether collateral is available for SBA financing and how important refinancing is to your overall business opportunity financing process.

Buyers should make an early determination concerning the length of lease to be arranged in conjunction with buying the business. As noted previously, business opportunity financing and investing does not involve the purchase of commercial real estate, so arrangements must be made for a long-term lease. The length of the lease is important because the normal business finance terms will restrict the length of business financing to the period covered by the lease (although buyers should anticipate a ten-year maximum for investment business loans). For example, with a seven-year lease, the commercial loan is likely to be for seven years, and even with a fifteen-year lease, the commercial financing will probably expire in ten years.

Even though real estate is not included in a business opportunity transaction, buyers should nevertheless investigate whether including real estate is a viable option or not in order to buy a business. With the inclusion of commercial property, you can obtain a longer business loan and the interest rate will be lower. However, improved business financing terms should not be the sole factor you look at, since the absence of a commercial mortgage can prove to be a significant advantage in a declining real estate market that currently exists in many areas of the country.

Investors and buyers should discuss business finance options with a business opportunity loan expert before making any offers to buy a business investment. These discussions should include issues such as down payment possibilities, potential purchase price, seller financing, tax return requirements, buyer credit scores and collateral options.

As a final precautionary note, in most circumstances the availability of business opportunity financing is more restricted than commercial real estate financing. There are also some problems unique to business opportunity loans, and commercial borrowers should make every effort to avoid these potential business financing complications.