FRANCHISESERVICES Lending a hand... Hitachi Capital Franchise Finance on borrowing from the outset S
urprisingly, prospective franchisees will often only consider using their own funds when they have ‘just
enough’ cash as opposed to borrowing. Why? Maybe an unwillingness to pay interest and bank fees, or they don’t think lenders are lending, or simply don’t want any of the perceived ‘hassle’! During diffi cult times, it's possible that
trading, for a new business, may not be as positive as was predicted. The franchisee may see losses and run out of cash. It could be more diffi cult to obtain credit at this point. Requesting a loan at the outset of your franchise journey could help avoid these risks. For example, when you have a well-written, viable business plan, it may be wise to seek fi nance of up to 50 per cent of the start-up costs as opposed to using your own personal reserves – which could be used as a safety net when required. On the other hand, things could be
going very well and so the franchisee wishes to purchase an additional territory. However, as the original franchise was
totally funded through the owner’s cash at the outset, there isn’t the required cash available to reinvest. In these circumstances, lenders may require a further personal cash contribution. It is unlikely they would be willing to rely upon what was originally put in as personal contribution during the initial start up. So, once again, there would have been some benefi ts to borrowing at the outset and keeping some funds aside to assist with expansion when the owner (and not the lender) feels it is the right time. Deciding between self-funding and
borrowing cash is not clear-cut. There is no right or wrong answer and every franchisee should consider all the options available to them and select which is the most appropriate for their business. If the level of cash reserves a franchisee can access are plentiful, then self-funding may well be a sensible option. However, if self-funding the project leaves you without the critical safety net or without the funds you may need for future expansion then borrowing
an element of the total capital required may be a more suitable option for you to establish your business. After all, it is better to be safe than sorry as there really are no guarantees in business! l
CONTACT Hitachi Capital Franchise Finance Financial services 01844 355 575
hitachicapital.co.uk/franchise-fi nance info@franchisefi
nance.co.uk
Supporting your franchising ambitions
Services provided by an award-winning team with over 40 years experience.
• Business planning • Start up and working capital loans • Equipment finance • Business training services • Multi-unit financing
01844 355575
hitachicapital.co.uk/franchise-finance
Hitachi Capital Franchise Finance is a trading style of Hitachi Capital (UK) PLC. Authorised and regulated by the Financial Conduct Authority. Finance is provided by Hitachi Capital (UK) PLC. Hitachi Capital Franchise Finance also offer credit broking services, and may introduce you to a selected panel of third party lenders. Office Address: Beacon House, Stokenchurch Business Park, Ibstone Road, Stokenchurch, Bucks, HP14 3WN. T: 01844 355575
www.hitachicapital.co.uk/franchise-finance Registered Office: Hitachi Capital House, Thorpe Road, Staines-Upon-Thames, Surrey TW18 3HP. Registered in Cardiff under companyno. 1630491
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