Multiple financing avenues means more opportunities for franchisees

Jessica SarterFranchise Finance

The franchise loan marketplace is looking up for entrepreneurs and potential franchisees. As NuWire Investor recently noted, entrepreneurs have a number of avenues through which they can secure crucial funding for their prospective business ventures.

"The big issue has been a lack of credit to meet the demand for [franchisors' and franchisees'] growth," Steve Caldeira, CEO of the International Franchising Association, explained.

First and foremost, financial institutions are beginning to open up to a greater number of business owners. However, potential franchisees could also consider borrowing against the equity of their homes or tapping into their 401(k)s for business investments – both with little or no blowback.

"[The 2012 calendar year] probably has one of the bleakest outlooks in terms of improved levels of employment," says Shelly Sun, CEO of BrightStar Care. "If you're going to be able to find a job, isn't it better to bet on yourself in uncertain times than hope for the best?"

Just because it's easier to secure loans, doesn't mean franchisees should rush into it. It's crucial to consider all the ramifications of taking out loans before making that commitment.