You don't have to be a banker

Packing A Loan Request To Buy A Franchise

You don’t have to be a banker, a CPA, or even an accountant to package a franchise loan request, but if you haven’t packaged one before, you probably won’t get the loan closed. Now is not the time to do-it-yourself!

But if you’re an entrepreneur, or even somewhat of an entrepreneur, we know better than to tell you what you can and can’t do, including packaging a loan successfully. So we won’t tell you. Instead, we’ll provide some information about what to include in a loan package, and then you can decide whether to do it yourself, or to seek assistance from a professional.

Preparing Your Loan Package

Whether you apply for a microloan, a SBA guaranteed loan, or a traditional bank loan, similar information is required to complete a loan package. The SBA Web site provides a detailed checklist of the required items. Here’s what the SBA says you’ll need to provide:

Loan Package Checklist

            Personal Financial Information:

            Personal Financial Statements       

            Copies of Personal Tax Returns (including all schedules for 3 years)  

            Source/Amount of Owner's capital injection        

            Credit Report for owners of 20% or more

            Resumes from Principals, Partners or Proprietors         

            Financial/Business Information:

            Business Plan           

            Description/History of the Business         

            Benefits from the loan         

            Articles of Incorporation or Assumed Name Certificate 

            Credit Report for the business and owners of 20% or more

            Cash Flow Projections

            Projected Profit and Loss

            Balance Sheet and Profit & Loss Statement

            Copies of Business Income Tax Returns (for 3 years)    

            Copy of Existing Facility Lease(s) and/or Lease(s) to be acquired       

            Schedule of All Business Term Debt (Notes, Contract & Leases Payable)        

            Aged Accounts Receivable & Payable        

            Collateral Requirements:

            Schedule of Fixed Assets to be acquired with loan and their cost         

            Appraisal on real estate and most recent Tax Appraisals

That’s a lot of paperwork, and unless you’re used to handling details, finding a professional to help you may be the best option. The good news is that many professionals are available to assist you and you can find them by visiting our expos or through our Supplier section.

Who’ll Do The Underwriting?

Should you decide to package the loan yourself and take it to your bank, you (and your franchisor) must be willing to do some of the work the bank used to do to process a loan application.

Underwriters like to work in their comfort zones – which is generally not franchising – so you’re going to have to help them to get them to actually consider your request. As a first step, they may need to learn more about how franchising works before they can begin looking at your loan package. Be prepared to introduce your banker to the International Franchise Association and even better, invite your banker to an expo!

Who’s Interested In Franchise Loans?

There’s no longer a national franchise lender in the United States – banks became more localized after the most recent recession – but many banks, including community banks, favor franchising and may want to consider your loan application. Your franchisor may be the best source of information about receptive lenders, but you can also call banks and ask about their interests.

Today, lenders want everything in a neat box, and who can blame them? You go outside of that box and the answer to your loan request will be no. So make certain that you follow the procedures, or get someone who knows what they’re doing to help you!

Upcoming Expos

Jan 24-26, 2019 Ft. Lauderdale, FL
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Franchise Expo South

Broward County Convention Center
May 30-Jun 1, 2019 New York, NY
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International Franchise Expo

The Javits Center
Sep 13-14, 2019 Rosemont, IL
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Franchise Expo Midwest

Donald E. Stephens Convention Center