India has demonstrated huge economic potential since the liberalization in the early 90s. The rapidly increasing urban demographics and higher disposable income have fueled consumer spending. As businesses look to expand and reach bigger audiences, the best way to replicate a successful business model is through franchising.
For a new entrepreneur, franchising offers an excellent opportunity to leverage a brand’s equity and its proven business processes.
Franchise owners also expect probable partners to bring a lot more to the table. You are expected to bring in physical assets such as real estate and machinery, fund inventory, utilities and other working capital needs, and most importantly, royalty payment to franchise owners – which doesn’t come cheap.
Before you jump on the franchise model, it must be understood that there is a significant capital investment required to be made. For most first-time entrepreneurs, a business loan for franchise ventures can help fulfill most of the criteria that a brand might be looking for.
Additional Read: 5 Ways To Grow Your Existing Business
A business loan in India is easily available for any kind of venture, but before you make a loan application, here are a few things you should understand first:
Talk to your franchiser
Your franchiser knows everything about the business and will be in the best position to guide regarding set-up costs. Be sure to seek information regarding every expense you might incur. This will help you make accurate forecasts and better estimate your business loan needs.
Create a strong business plan
A practical and robust business plan plays a critical role in getting your business loan application approved. A well-rounded business plan includes everything, your work experience and skill set, your personal assets, the scope of the business, market analysis and competitor evaluation.
Additional Read: Simple Tips To Build A Great Business Plan
Understand your eligibility and cost of financing
Figuring out your business loan eligibility is simple. You can find all details on a lender’s website. The financer’s representative can help too. Matching your expectations with your eligibility will also help fast track your application.
Another crucial aspect to consider is the interest cost on the business loan. Even though franchise businesses have a proven success ratio, due to the heavy upfront investment and operational costs, it could still take a long time for the business to break-even and become profitable. You, therefore, must choose a financing partner that not only offers competitive interest rates but also long-term loan for business that allows you to pay as per your convenience and cash flow patterns.
Your ability to source capital can make or break your franchising dream. Choosing the right financing partner for your business loan is as important as choosing the right franchise. With affordable business loan interest rates, higher eligibility and customization, Tata Capital prides in fueling the dreams of millions of entrepreneurs.