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All banks want to see some kind of business plan for a small business loan.
With a franchise, the franchisor will already have background information to
help you prepare for a small business loan. Here are some of the basic things will need to
complete your loan application:
- Resume
- Market Research
- Site Analysis - lease agreement
- Marketing Strategy
- Financial Statements
- Copies of Important Documents
Since you are the person ultimately responsible for whether the business
fails or succeeds, your work experience is vital. A resume will give the
bank an idea of your work experience. Try to adjust your resume to include
relevant experience. If you are opening a fast food restaurant, show that
you have some retailing or food experience.
Market research is something that your franchisor can help you out with.
They should have some of this information prepared for you. Market
research should include trends in the industry, competition in the area, and the
size of the market and its potential. Before you even apply for a loan,
you should know some of this research off the top of your head. If you
don't have faith in your product, the bank won't either. The market
research should show the lender that your business will grow and thrive.
If you are entering an oversaturated market place, or testing a product that has
no history, you will need to do your research to prove that your business idea
will be successful, and you will be able to repay your debt. For example
if you want to open a film development store, you should include projections on
digital photography. The bank will want to know what your niche is in this
market place. How are you different from your competitor down the street.
You will need to tell the bank where you will set up shop. Are you in a
mall, on a street, or the airport? Explain the traffic patterns, and your
target customer. If you are buying an existing franchise, then any past
performance date as well as copies of the acquisition documents can be included
in this section.
The bank will also ask how you plan to advertise your business. Does
the franchisor run national or local advertisements? Do they run print ads
or TV advertisements? How often do the ads run?
Financial statements of the franchisor, personal financial statements of the
franchisee, profit projections, credit references and the last 2 years tax
returns should be included in this section.
The bank will request that you include supporting documents, such as lease
agreements, franchise offering agreements, licenses, and so forth.
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