Starting on your own (Daily Mail franchise story)
posted on 14-Jul-2008
Starting on your own
By: Linda Whitney
DON'T let the credit crunch deter you from starting your own business.
Mark Scott, the director of franchise development at NatWest Bank, says: 'There is money set aside for lending to suitable franchisees starting in business with reputable, established franchises.
We are keen to hear from them.' Most of the major banks have specialist franchise departments that will typically lend up to 70 per cent of the money you need to get started, provided they have an established relationship with the franchisor.
The bank will expect to see a detailed business plan. The franchisor can help you draw this up, but ultimately it must be our own work.
The bank will check your financial situation, credit history, existing funds and business skills. It might want to take a charge on your home.
If you have no assets, the bank can offer you access to the Small Firms Loans Guarantee Scheme, which will guarantee 75 per cent of your loan.
For advice about other financial help such as government grants, see www.businesslink.gov.uk which has a grants and support directory.
Do not be tempted to overborrow. 'The repayments will come out of the business income, so ensure that you are left with a decent surplus, in case of a general downturn,' says Mr Scott.
Reputable franchisors will help you with advice about raising the money.
Andy Hirst, from pizza franchise Domino's, says: ' We give potential franchisees a list of franchise contacts in the banks and point out the Small Firm's Loan Guarantee Scheme.' THE investment required for a new Domino's store is £240,000. Banks will lend 70 per cent, so franchisees need to come up with £80,000 themselves.
Mr Hirst says: 'We generally advise franchisees to ask lending banks for a capital repayment holiday in year one, as that is likely to be the quietest, and to get a loan over ten years, to keep the cost of repayments down in the early years.'
