We know many banks and lending agencies have their hands tied when it comes to providing loans for prospective franchisees. But are entrepreneurs putting enough of their own wealth on the line in order to access loans?
Smartmoney.com brings us the story of Craig Holman, an entrepreneur from Columbus so determined to open an AdvantaClean franchise that he literally bet the farm on the deal - which is to say he offered his farm up as collateral. He received an $85,000 and has not looked back.
The story makes the case that collateral has never been more important for franchisees in the pursuit of lending. Loans to small businesses are down $60 billion since 2008 according to the story.
While you'll always need some collateral to launch a franchise, it's incredible what something sizeable can do for your prospects. Holman's loan allowed him to "pay a one-time franchise fee to AdvantaClean, buy a truck and purchase equipment for water-damage recovery, mold removal, duct cleaning and dryer vent cleaning. He also hired one full-time and three part-time workers and an office assistant."
So before you head into that office for that meeting with the bank, do your best to raise as much collateral as you can.