Purchasing a Franchise

[Leakology]

Hi all,

 

My partner and I are interested in purchasing a "low-investment" franchise. We recently incorporated our company name to operate "whatever" franchise under the company, as it will become an asset management company, owning a few different franchises, in the future.

The problem is I have terrible personal credit (high 500) and my partner has great credit (mid 700). Everywhere we turn to borrow money, i.e. The Business Finance Store or anything similar...they want us to personally guarantee my partner's credit but it doesn't seem legit once we get to the underwriting phase.

 

Any suggestions on how to borrow approx $50k?

[jmight]

You might consider contacting the companies in which you wish to purchase a franchise. They will generally help with the paperwork and have lists of lenders they work with, increasing the odds of funding. It will also help determine which franchises you qualify for.

 

Your partner can try for personal loans or credit cards to raise $50k - maybe even try the P2P lending networks - would be my suggestion.

[BRBiz]

One thing to keep in mind with a lot of business loans is often the lenders require all owners to be on the loan. So as suggested above a personal loan may be the best way to go.

[Leakology]

Is there a way to get 2 different personal loans from different banks in a quick amount of time?

[BRBiz]

Is there a way to get 2 different personal loans from different banks in a quick amount of time?

Yes just apply at several banks! As long as you get the second before the first reports your fine. I have done that with auto loans before and have had no issues.

[jmight]

Unlike with Auto Loans though, the score will drop with each application.

 

I'd personally try Prosper and/or The Lending Club first - I know the first one doesn't pull a hard inq until the loan is about to disburse. So at a minimum you won't have to worry about lowering your score if it doesn't go through.

 

If you're going to go the conventional bank route for a loan, make sure to do research first on the banks your applying with and compare yourself to others who have got approved recently (rules keep changing so going back too far won't be of much use). No point in lowering your score just to get denial letters.

 

YMMV but it may be hard to get large lines without some kind of collateral at a conventional bank.

Edited April 30, 2013 by jmight

[BRBiz]

Unlike with Auto Loans though, the score will drop with each application.

 

I'd personally try Prosper and/or The Lending Club first - I know the first one doesn't pull a hard inq until the loan is about to disburse. So at a minimum you won't have to worry about lowering your score if it doesn't go through.

 

If you're going to go the conventional bank route for a loan, make sure to do research first on the banks your applying with and compare yourself to others who have got approved recently (rules keep changing so going back too far won't be of much use). No point in lowering your score just to get denial letters.

 

YMMV but it may be hard to get large lines without some kind of collateral at a conventional bank.

I agree it will be tricky getting a large loan so it may be a good idea to try for a couple smaller ones if the above mentioned doesn't work out or even a CC and a loan.

[stroked89coupe]

I do not think lending club pulls a hard. They also give you for fico score right after you apply. Wether approved or declined. Lending club also requires some pretty strict stuff when it comes to approvals. I actually just applied (For the fico and to see what kind of rate they would give me and my Girlfriend) I was expecting a decline. Mid 6 fico's but with a BK. New auto loan and Several established CC's in good standing after the bk- Declined.

 

 

My Girlfriend on the other hand was denied and her FICO was 740. The reason was lack of instalment loan information. She has never had an auto or a installment loan. But does have multiple 20K lines. Util was at zero.

 

 

 

Sorry for the ramble. It's just I used to think of lending club as the bottom of the barrel. Aparently they have pretyt stict approving standards (Not that MY credit profile is anything to brag on). You would not think so looking at all of the notes and the high utilization ect that some people have.

 

 

I just decided to check it out after I read this thread. http://creditboards.com/forums/index.php?showtopic=508971&hl=

Edited April 30, 2013 by stroked89coupe

[Leakology]

I do not think lending club pulls a hard. They also give you for fico score right after you apply. Wether approved or declined. Lending club also requires some pretty strict stuff when it comes to approvals. I actually just applied (For the fico and to see what kind of rate they would give me and my Girlfriend) I was expecting a decline. Mid 6 fico's but with a BK. New auto loan and Several established CC's in good standing after the bk- Declined.

 

 

My Girlfriend on the other hand was denied and her FICO was 740. The reason was lack of instalment loan information. She has never had an auto or a installment loan. But does have multiple 20K lines. Util was at zero.

 

 

 

Sorry for the ramble. It's just I used to think of lending club as the bottom of the barrel. Aparently they have pretyt stict approving standards (Not that MY credit profile is anything to brag on). You would not think so looking at all of the notes and the high utilization ect that some people have.

 

 

I just decided to check it out after I read this thread. http://creditboards.com/forums/index.php?showtopic=508971&hl=

 

 

I thought about Prosper and TLC back when it first started some years ago and its awesome to see what they've amounted to. I was on the sites a few weeks ago, I just figured there would be more alternate routes

I've read the ENTIRE post on building business credit as well but it seems like that will delay us another year or so as far as lending power.

 

I have to figure this out

[BRBiz]

I do not think lending club pulls a hard. They also give you for fico score right after you apply. Wether approved or declined. Lending club also requires some pretty strict stuff when it comes to approvals. I actually just applied (For the fico and to see what kind of rate they would give me and my Girlfriend) I was expecting a decline. Mid 6 fico's but with a BK. New auto loan and Several established CC's in good standing after the bk- Declined.

 

 

My Girlfriend on the other hand was denied and her FICO was 740. The reason was lack of instalment loan information. She has never had an auto or a installment loan. But does have multiple 20K lines. Util was at zero.

 

 

 

Sorry for the ramble. It's just I used to think of lending club as the bottom of the barrel. Aparently they have pretyt stict approving standards (Not that MY credit profile is anything to brag on). You would not think so looking at all of the notes and the high utilization ect that some people have.

 

 

I just decided to check it out after I read this thread. http://creditboards.com/forums/index.php?showtopic=508971&hl=

That was my initial thought that they tend to be a little stricter then a bank..

 

You could still try the personal loan route with a couple lenders.. A credit union or two would be a good start. If you have really good credit $50k is doable.

[jmight]

 

I do not think lending club pulls a hard. They also give you for fico score right after you apply. Wether approved or declined. Lending club also requires some pretty strict stuff when it comes to approvals. I actually just applied (For the fico and to see what kind of rate they would give me and my Girlfriend) I was expecting a decline. Mid 6 fico's but with a BK. New auto loan and Several established CC's in good standing after the bk- Declined.

 

 

My Girlfriend on the other hand was denied and her FICO was 740. The reason was lack of instalment loan information. She has never had an auto or a installment loan. But does have multiple 20K lines. Util was at zero.

 

 

 

Sorry for the ramble. It's just I used to think of lending club as the bottom of the barrel. Aparently they have pretyt stict approving standards (Not that MY credit profile is anything to brag on). You would not think so looking at all of the notes and the high utilization ect that some people have.

 

 

I just decided to check it out after I read this thread. http://creditboards.com/forums/index.php?showtopic=508971&hl=

 

 

I thought about Prosper and TLC back when it first started some years ago and its awesome to see what they've amounted to. I was on the sites a few weeks ago, I just figured there would be more alternate routes

I've read the ENTIRE post on building business credit as well but it seems like that will delay us another year or so as far as lending power.

 

I have to figure this out

 

There are alternatives such as cash advances against future credit card sales, factoring your A/R, loans against inventory, etc. Those options though require you to already in operation, generating sales.

 

I would highly recommend before going after funding that you should really figure out which franchise you want to run and ensure you meet their financial and other requirements.

 

McD's for instance requires that you put down 25 to 40% of the purchase in cash, along with having certain net worth requirements.

From their site: "Generally, we require a minimum of $750,000 of non-borrowed personal resources to consider you for a franchise."

 

I believe you will find that most franchises will require you have to "non-borrowed personal resources" well in excess of the amount you are looking at borrowing.