How Bad Credit Impacts Buying A Franchise
I speak to a lot of people on a daily basis about owning a franchise and one of the scariest part about the process is the “F” word-Financing!
Financing is the main thing that stalls a lot of people in their decision making about moving forward.
Credit plays a very important role when it comes to owning a franchise. You will most likely need some financial assistance when you first become a franchise owner, and having a poor credit score can make this harder to obtain.
When you buy your franchise you will most likely need a small business loan to pay for the new venture. The loan process is very simple but can become quite difficult if your credit score is not as good as it should be.
Sometimes you’ll be able to get a small loan regardless of your credit score, but this is only if you have a very well thought out business plan and are able to convince the bank that you are a trustworthy entrepreneur who will be able to pay the loan back. In addition, you will need to provide the bank with an accurate financial forecast for monthly payments and revenue. It is important to show that you can repay the loan in a timely manner.
The interest rate that you receive from a bank is a direct result of what you bring to a table as an entrepreneur. If you are putting more cash up front on the franchise deal you can have a favourable interest rate and it will be even better if your credit score is a good number.
In conclusion, although having a strong credit score will make getting a loan easier, it is still possible to receive financial help without it. However, if this is the case, it is very important to have a solid plan that clearly exemplifies what you plan to do with the loan.