In order to start your pet grooming franchise, you will need funds. If you have a significant amount of capital then this is not a big deal. However, if you don’t have the funds on hand to buy the franchise, the next thing you will need to do is find the funding for your franchise. There are a few ways that you can approach this.
Getting a Loan
The most popular way for people to secure their funds for the pet grooming franchise is to take out a loan. This is effective for many people, though it is not always as easy as you may think it is.
What You Need to Get a Loan for Your Pet Grooming Franchise
Depending on the type of loan you choose, there are different requirements. However, almost any loan you take out will require that you have some capital as a down payment on the loan. The amount that will be required will depend on several factors including the lender, the amount of money you are borrowing, your credit score among others.
Types of Loans
There are several options for the loan. Here are the ones you should know about:
- Conventional Loans– These are traditional loans from large banks and other lenders. You will need to put your home, vehicles or other valuables up as collateral for the loan.
- Unsecured Loans- These are growing in popularity because they are quick to close and do not require collateral. While this may seem like a dream come true, keep in mind that they have much higher interest rates which mean the loan will cost you more in the long run.
- Home Equity Loan – For those that have a significant amount of equity built up in their home, this can be a great option for your pet grooming franchise. This is great because it builds upon your already existing loan. The problem though is that not everyone has a significant amount of equity in their home. In fact, after the economic downturn that started in 2008, many people found themselves underwater on their loan. While this has improved since then, there are still many homeowners that are barely breaking even with their home.
- 401(k) Loan- Depending on how much you have in your 401(k) and how much you need, this can be a viable option for you. Keep in mind that there are different regulations regarding borrowing from your 401(k) so make sure you know the maximum amount you can borrow as well as the repayment schedule. Also, remember that this is savings for your retirement so make sure it is paid back in a timely manner so you don’t lose it.
- Peer to Peer Loans- If you need $25,0000 or less to start your pet grooming franchise, then one of the best ways to obtain this financing is to use peer to peer lending. This means you either talk with people you know to acquire the funds or use an online platform. There are sites such as prosper.com where you can input the amount of money you need, the purpose and a little bit about yourself and then find post a listing. From there, lenders will contact you about financing the loan for your pet grooming franchise.
Tips for Shopping for a Loan
When you are shopping for a loan, there are a few things you will want to think about to help you get the loan you want at a great rate on the loan for your pet grooming franchise. Some of the things you should look at include:
- Make sure that your credit is in order. Look at your credit report and make sure everything is accurate. This may seem tedious but improving your credit score by even a few points can lower your costs significantly over the life of the loan.
- Know what is acceptable collateral with your lender. You do not always need to put your home up as collateral. In many cases, you can use your savings account. CDs and other financial accounts as well. Talk with your lender to understand what they look for so you can find the solution that is right for you.
- Talk with your financial advisor to fully understand the risks with the loan options available for your pet grooming franchise. This will help you to make the best decision as to which loan to go with.
- If you have great credit and an excellent history with loans, then you will be able to negotiate to get a better rate on the loan. This can help to reduce the overall cost.