Financing your EarthWise Pet Supply franchise may be easier than you think. Consider the following strategies for achieving your goals.
Qualified franchise candidates must have $100,000 in liquid assets and a net worth of at least $300,000. Once you’ve met those benchmarks, you can tap into a variety of sources to get your business started.
Startup costs for a standard franchise location of 1,600-2,200 square feet range from $347,000 to $530,000, and most banks will finance 80% of the project costs, which in this case would include such items as franchise fees, construction, equipment, inventory, working capital and financing costs. EarthWise offers in-house financing and has partnered with third-party lenders to help you get the assistance you need.
There are certain questions candidates should ask themselves when considering financing:
Ultimately, you’re trying to answer the golden question: What is my best strategy for achieving my goals?
The following are among the most common methods franchisees use to finance their franchise:
A HELOC traditionally offers low interest rates; are highly flexible, with payments that can be interest-only if needed and no set repayment schedule; and relatively low documentation. You don’t need to write a robust business plan or disclose where the funds will be utilized. As the name indicates, your home mortgage is the collateral. A HELOC also helps you conserve your cash and helps your pet supply franchise be more resilient.
This method allows you to start your business using qualified 401K and IRA funds with no declared income or 10% penalty. You won’t need a robust business plan nor will you have to participate in an elaborate loan closing. You can conserve your liquid assets, and you can pay yourself the interest, not the bank.
This is a government-backed loan that eliminates the bank’s risk and makes them more willing to approve you for financing. Typically, you will receive a 30% cash injection, which allows you to conserve your cash. The cost of money is reasonable, usually 2.75 points over prime. There is no pre-payment penalty, and more money is available with less collateral once you have a track record of success.
Because they know you, friends and family are usually flexible on repayment terms and may not require any collateral. Some may bring certain areas of expertise into your business before supporting your pet supply franchise..
Partners should have complementary skill sets that add value to each other. Partnerships can offer greater leadership and management capacity as well as the ability to grow faster. You’ll have more eyes on the business, and differing schedules may allow for more flexibility.