Let’s face it – the world has generally appeared to be awful for the past 10 months. The unemployment rate is climbing, many restaurants and other businesses have shuttered their windows and doors and there is, in general, a struggle for kindness.
However, within the franchise space, some brands, some business models have flourished. Some concepts are seeing double digit Year-over-Year sales growth. Are there new protocols to stay safe? Yes, but that doesn’t mean that business can’t happen.
One significant consideration when evaluating starting a business (whether it be on your own or with a franchise) is getting funding and then paying for it while still in the start up phase. It has stopped some that were on the path to business ownership – that fear of not being able to pay the business bills and potentially facing failure. So – let’s have this be not only a Good News post but a Great News post! The stimulus bill, where many only hear of the loans for existing businesses (PPP, EIDL) also includes some amazing benefits for new business start ups.
Here is a summary:
|**last time, the SBA changed “approved” to “funded” after the initial rollout (that could be very different stages for different borrowers)|
|**any payments the SBA makes on behalf of the borrower are considered non-taxable income|
The SBA has increased the guarantee % from 75% to 90% for the banks
|** An SBA guarantee (or guaranty) means that the SBA is responsible for repaying part of your loan if you default. As noted, the standard guarantee is 75%, raised to 90%, equating to less risk for banks to take a chance on you.|
|** This should have a positive impact on the lending landscape and bring more banks into new business lending and get some banks that had been sitting out during most of 2020 back in the market|
|** This DOES NOT mean more options for lower qualified buyers, just more options for qualified buyers and more industries that had seen limited lenders in 2020|
From now through September 30th, 2021, SBA guarantee fees are waived on most standard loans
|** The SBA guarantee fee ranges from 2% to 3.75% of the guaranteed amount of the loan, not the total loan amount. The rate increases as the loan amount increases.|
|** This fee is the responsibility of the borrower and something that is collected as a closing cost. It is similar to an origination fee for a mortgage.|
On a $350k loan,
With thousands of franchise business choices, people are naturally concerned about making the wrong choice and losing their investment. With Franchise Business Source’ franchise search advisory services, we present you with brands that fit your financial and personal requirements. Knowing where to start and what to look for helps you confidently evaluate and actually envision your business success.
To explore franchise ownership, click here to schedule a call. Like executive recruiters who are compensated by their client companies for finding employees, franchise consultants are compensated by franchisors for finding entrepreneurs like you. Your only investment with me, a Registered Franchise Consultant, is your time.
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