There could be a number of reasons why you are looking for finance; your franchise business could require more up-to-date equipment, new vehicles, start-up capital to open your business or money to expand your existing franchise operations. Each business owner has different goals for their business, so it is crucial that lenders are equipped to facilitate the demands of their customers.
The cost of credit is an important factor when choosing a lender, but there are other things which should be considered when choosing whether a product is right for your business. However, there are many things you should consider in advance of approaching a lender for finance:
• Which lenders have the risk appetite to meet your needs?
• Will that lender provide the level of support that you require/desire?
• Who can facilitate your needs quickly and effectively?
• Does ethical practice mean something to you?
Let’s take a deeper look:
Assessing your eligibility and the lenders risk appetite
Lenders will offer an array of finance products to provide opportunities to business owners to get the funding they need. However, with lending large sums of cash comes an element of risk for the lender. Each institution, bank or non-bank, will have their own eligibility criteria for credit and appetite for risk. It’s important to consider your credit history, as these play a key part in the lenders decision-making process alongside their eligibility criteria. The appetite of the lender is something your broker, if you opt to use one, should have knowledge of in advance to identify who are the most suitable and viable funders for you. If you don’t use a broker, it is advisable that you speak to several bank and non-bank lenders to understand who is best equipped to support you.
A personalised customer experience
We can all appreciate that finance can be quite complex. Some may be well versed in this area and are confident to take on the management of their finance agreements with little to no support. However, you may wish to focus more on your day-to-day business where your time and skills could be better placed. There are lenders who are equipped to provide a support platform, who can navigate you through the complexities of funding who are highly responsive and attentive. Evaluating whether your business goals will be better achieved and by how much is important when weighing up if a bespoke service could be hugely beneficial, particularly during challenging times and periods of uncertainty, like the pandemic.
Speed and efficiency
How soon do you need the finance? Processes and technology are continually improving, helping lenders make faster and more accurate financial decisions and allowing them to pay out funding to the customer more quickly. Dependent on the size and complexity of your finance proposal, finance can be delivered within a matter of days or could take months. Some lenders will also have capacity within their workforce to process your proposals during busier periods and may be able to provide certain products at a faster pace than others. You could look for finance from a range of lenders to suit your time frames – a broker should have the expertise and access to navigate you through this, should you wish to use one.
Sustainable development and ethics
With a greater focus in the modern world on sustainable and ethical practice, you may want to look at projects that your prospective lender has worked on to contribute positively towards protecting the environment. Are they committed to reducing their carbon footprint? Are they contributing towards charitable causes? You may want to work alongside a business which has values which are aligned with your own. This could influence your decision-making.
Are you making the right choice?
There is no right or wrong answer when deciding between finance providers, bank or non-bank. However, it is crucial to take the time to chat with each and research the products on offer to ensure that you’re making the best decision for you. Alternatively, working with a broker with that knowledge, who can advise and guide you through the process is a viable alternative. It doesn’t have to be a daunting process; as we begin to emerge from the uncertainty of the COVID-19 pandemic, we can certainly understand any apprehension and caution about choosing the right lender. These are challenging times, and you want to make sure the decisions you make fit the needs for you and your business.
Can we help you?
Hitachi Capital Franchise Finance operate as a lender and a broker, bridging the gap between these services to provide a flexible range of financial solutions to accommodate your needs. We provide support to franchisees and franchisors at each stage of their franchising journey, providing a service which is attentive and focused on realising your ambitions as an individual and a business.
