Franchise 24/7

Raising the capital

Most people considering a franchise business rely on borrowing some money to get started. While as many as 80% of new start-up businesses fail within their first ten years, that's according to Barclays Bank, franchising in the UK is considered a much safer and more successful route do go down.

Banks favour franchising as a lower risk strategy to entering business. They recognise that a market already exists for a franchise product or service. They also feel more comfortable lending to a franchise as it comes with a trading history. Another advantage is that it's a tried and tested business, proven to be successful, with ongoing support and training that means the owner is not alone.

Security on Loans

Most lenders will look for some form of security before they approve a loan. If you're looking to borrow £25,000 or less then this can normally be done on an unsecured basis, providing of course that you have a good credit rating and stable employment.

If you're seeking to borrowing in excess of £25,000, then security can be made using assets such as property, stocks & shares, equity release, savings or wills.

NOTE: It is advisable to receive expert advice from the banks or a solicitor before you offer any form of security to a secured loan application.

Small firm Loans Guarantee Scheme

If you don't have sufficient security to satisfy conventional bank lending then you could try The Small Firms Loan Guarantee. This scheme allows businesses, without sufficient security, to obtain a loan from participating banks guaranteed by the Government.

How this works is the Department of Trade and Industry (DTI) guarantees 75% of the loan and you pay the DTI a premium of 2% pa based on the outstanding loan balance. It is restricted to a maximum of £250,000 and to businesses that have been trading for less than five years with a turnover of up to £5.6m.

For further information on the loans scheme , please see below.

HSBC

Lloyds TSB