When it comes to financing the purchase of a franchise, many candidates don’t have a complete picture of the financial and lending options available to them. What are the best options? Best practices? To get you up to speed, Any Lab Test Now and a couple of our lending partners collaborated to bring you the basics of financing a franchise. Below, we take a look at franchise financing from the top down…
The Franchise Registry
As far as lenders are concerned, for any franchise concept to establish legitimacy and be eligible to finance, it must appear in the Franchise Registry, a searchable database that helps financial institutions evaluate the creditworthiness of franchise brands. You can view the Any Lab Test Now’s verified status here. 
How Much Capital Will I Need?
The requested loan amount is very important, as most banks prefer to write loans for a minimum of $200K. Although there are other options, there are fewer and fewer banks willing to underwrite loans under this amount. To reiterate, the minimum financial qualifications needed to franchise with Any Lab Test Now, we require $90K in liquid capital and a total net worth of $300K.
Costs to Consider
All franchises require a franchise fee, royalties, and startup costs necessary to establish operations. After an Any Lab Test Now franchise opens for business, additional operating capital is required to sustain operations prior to the breakeven point.
Franchise fees: also referred to as the initial franchise fee, this one time payment covers upfront costs for the brand’s trademarks, products, systems, and intellectual property involved in getting an Any Lab Test Now business up and running. The franchise fee is disclosed in the FDD, and payment signifies the execution of the franchise agreement
Royalties: these are recurring fees required to uphold the franchise agreement and are set according to a percentage of gross profits or a flat monthly fee
Startup costs: the startup costs associated with Any Lab Test Now include site selection, lease, build-out, office supplies, and initial inventory
Financing Options
It’s common for Any Lab Test Now franchising candidates to require financial assistance to close the deal. There are numerous options and lending avenues to investigate—including some alternatives you may not have considered. Loans processed for Any Lab Test Now tend to be SBA and Rollovers as Business Startups (ROBS), as conventional financing is not available for single unit franchisees. The average loan term is 10 years, with an average interest rate of 5.25% (Wall Street Journal prime rate + 2%). It’s highly recommended that candidates do the proper amount of due diligence to locate the ideal funding route, but here are the most common options:
Bank/Credit Union Loans: if you’ve done business with your personal bank or credit union long enough, you should at least investigate the amount and terms they’re willing to offer
SBA Loans: a popular route is a loan guaranteed through the Small Business Administration. Just like the Franchise Registry, the SBA does not arrange financing for concepts that do not appear on the SBA Franchise Directory. Any Lab Test Now is a verified entry (S0121). Keep in mind that the SBA doesn’t make the loan, but rather secures it on your behalf through a network of financial institution partners. The two most popular SBA loans for the franchising industry are SBA 7(a) Loans, and SBA 504/CDC Loans.
Retirement Funds: 401Ks can be an inviting way to finance your own business, commonly known as Rollovers as Business Startups (ROBS). Essentially, you can access your retirement funds for franchise investment without incurring penalties, fees, or taxes. However, proceed with caution when going this route and enlist the help of a professional tax and accounting advisor to avoid the associated risks.
Portfolio Loans: this is a security-backed loan which leverages the amount against your own portfolio as collateral.
VetFran: Any Lab Test Now is an accredited member of the VetFran program, which provides a 10% discount on the franchise fee for any U.S. military veteran.
Applying for Funding
When you begin the process to secure the funds necessary to purchase an Any Lab Test Now franchise, make sure you have the following documentation available: 1) your credit score/history, 2) personal financial records, and 3) your business plan (pro-forma).
According to DeAngelou Stevenson, VP of Franchise Lending/SBA Franchise Banker at Atlantic Capital Bank, development of the business plan is a key element in the loan process. “I have worked on a few Any Lab Test Now franchise start-up deals and the most crucial piece of the deals were the business plans. You want to make sure you’re as thorough and as detailed as possible. You’ll want your projections to be both realistic and attainable based on your specific market territory.”
