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How to Secure Dental Practice Financing | L3 Funding

The Ultimate Guide to Dental Practice Financing

Starting your own dental practice turns you from a practitioner into a businessperson. However, running your business while providing the best possible service for your patients means wearing multiple hats at once.

The greatest challenge of launching your own practice is finding the best dental loans for your needs. Let’s jump into what you need to know about dental practice financing and securing a loan for dentists that will allow you to plant the seeds of a flourishing new business.

What is a Dental Practice Loan?

The dental business has several advantages that make this industry attractive to lenders. For example, dentists commonly report six-figure annual incomes. Healthy incomes make these practitioners an attractive prospect.

Dental businesses are also largely insulated from economic downturns. While people may skip eating out or going on vacation during a recession or a pandemic, most people are still likely to address crippling toothache.

Business loans for dentists are relatively simple to secure, and you already have the inherent advantages of the profession to fall back on. Securing the best dental financing can enable you to address expenses ranging from the rent of your building to state-of-the-art equipment to your first employees.

Different Types of Loans for Dental Practices

Your dental business loan is designed to help you establish your business and see you through growing pains that come naturally to any new company. There are several types of financing available to you. You need to understand the ins and outs of each dental practice financing option so you can make the right move for your venture. 

Here are some of the most common dental practice loans and the pros and cons of each.

Equipment Financing

The equipment required for your dental practice largely depends on your specialization. For example, a family dentist will need different equipment from one specializing in cosmetic procedures, such as crowns and veneers.

Equipment financing helps you finance the purchases you want and need to provide your services. It includes the basics like X-ray apparatus, handheld dental tools, and patient chairs. You can also invest in advanced technology to help your practice stand out from the crowd.

Many new “dentalpreneurs” find themselves shocked at the cost of equipment in today’s market. Dental practice loans allow you to make those purchases without breaking the bank or going into debt.

Pros

  • Assume complete ownership of your equipment immediately.
  • Spread out the cost of expensive equipment that would otherwise be out of your budget.
  • Increase your future revenues by having the necessary equipment available.

Cons

  • Equipment financing is strictly limited to equipment purchases , leaving you with less flexibility.
  • These loans typically have higher rates than traditional loans.
  • Assuming full ownership of equipment in the fast-paced dental industry could leave you with a significant liability.

Startup Business Loan

Another option for dental practice financing is a startup business loan. These loans are specifically designed for dentists establishing their own practices for the first time. Aspiring business owners do not need to own an existing dentistry clinic already. All you need is a firm business plan and a reasonable credit history to qualify.

Startup business loans are available from several providers, including major banks and online investors. Make sure you do your research and shop around to ensure you are getting the best rates.

Pros

  • You have as much flexibility as you want to use your capital on anything. It could help purchase equipment or function as a dental office loan.
  • There are lots of providers, enabling you to find the lowest dental practice loan rates.
  • Startup loans usually come with more manageable loan rates.

Cons

  • Startup business loans can be more challenging to secure because they rely on your personal credit score.
  • Taking out large amounts can mean restricting your cash flow from day one.
  • You may need to tie up your personal assets to get approved for these dental practice loans.

U.S. Small Business Administration (SBA) Loans

The SBA does not provide any loans to any businesses. Instead, they guarantee loans to encourage private lenders to support new businesses. Lenders have the comfort of knowing that the SBA has guaranteed up to 85% of the loan amount. It enables them to take risks by investing in dental professionals who want to form their own clinics.

Strictly speaking, SBA loans function like any other business loan. The only difference is the Federal government has guaranteed them.

Pros

  • SBA loans are more affordable for business owners because of their favorable terms.
  • You benefit from capped interest rates, meaning that you will always be aware of how much you will be expected to pay per month.
  • Choose from both small and large loan amounts, so you get the loans for your dental practice that match up with your needs at the time.

Cons

  • SBA loans are notoriously difficult to secure. Strict criteria can make qualifying extremely difficult for applicants.
  • The application process is known to be slow and clunky. Expect to wait months for a decision on your application.
  • SBA loans come with a lot of rules on what you can use the money for. You have less flexibility than with other lending options.

Business Line of Credit

Taking out a business line of credit gives you a form of revolving credit to tackle those down periods and demanding billing cycles.

Think of a business line of credit as your dental practice’s personal credit card. You take out a business line of credit for a set period and only make repayments on anything you borrow. You’re not obliged to borrow any money, making it an excellent fallback option during your business’s early months and years.

Pros

  • Meet sudden and unexpected cash flow demands. If a customer is late paying, your business line of credit can avoid you going into the red.
  • You only pay back what you borrow when you borrow it. Smart utilization of a line of credit can prevent you from assuming bad debt.
  • Take advantage of opportunities with the maximum flexibility inherent within a business line of credit for your practice.

Cons

  • Business lines of credit often incur far higher fees than other lending options. You also need to account for the elevated interest rates.
  • Many lenders will only approve applications for business lines of credit from established businesses, meaning you’ll need to rely on a high personal credit score.
  • Most lines of credit come with lower borrowing ceilings, making them unsuitable for larger business purchases.

Merchant Cash Advance

Merchant cash advances can be used to boost your financing temporarily. If you’re experiencing slow periods or need to confront an emergency expense, a merchant cash advance can quickly get the money into your pocket.

Applying for a merchant cash advance is relatively simple because all you need are your previous numbers. The amount you can borrow and for how long depends on your business’s finances. You’re essentially borrowing against future transactions.

A merchant cash advance could be the solution if you need money quickly to get your business through a tough spot.

Pros

  • Get immediate access to cash. Borrowing against future payments means that most businesses get approved within a few days.
  • Lower credit scores are accepted since you already have something tangible in the form of future revenues.
  • There are no fixed monthly installments. More of your debt will be paid off if you have a good week. It gives you flexibility in your repayments.

Cons

  • Be aware of high interest rates. Merchant cash advance providers don’t always offer affordable options.
  • Higher payment frequencies can hurt your cash flow, leading to further problems running your practice.
  • Successful repayments will not improve your credit score because such transactions are not reported to the three major credit reporting agencies.

What Do You Need for a Dental Practice Loan?

It’s important that when applying for dental practice financing, you keep your application organized, know the right questions to ask, and choose the right lender. So, what are the most critical aspects of applying for a dental practice loan?

3 Questions to Ask Yourself Before Applying

There are three crucial questions to ask yourself before applying. Here’s a rundown of each question and what they mean.

Do I Have Good Credit?

Lenders want to see that you have a positive personal credit score. Check your credit score with your bank or credit card company. Anything above 670 is considered good, whereas anything above 740 makes you a tantalizing prospect for lenders.

Do I Have a Business Plan?

All lenders will ask to see a business plan. The SBA has plenty of free business plan templates online to help you create your own. A business plan maintains all the details of how your business will operate, its services, and how it will appeal to the local market.

Do I Have Access to Group Discounts?

Pay attention to both administrative costs and origination fees. Take advantage of group discounts. You may be eligible for group discounts if you’re a member of ADA or another industry organization. Factor these discounts into your business plan. They not only reduce your costs but potentially point you in the right direction of a suitable lender.

5 Things You Need to File Your Application

Filing your application requires time and attention to detail. Not having the required documentation or meeting the lender’s minimum requirements will delay your application or see it rejected.

Here’s what you need to file your application:

  • Minimum Credit Score – Since you’ll be using your personal credit score, make sure you meet the lender’s minimum requirements. You can obtain a free copy of your credit once a year from each of the three major credit bureaus: Equifax, Experian and TransUnion.
  • Business Plan – Fill out a comprehensive business plan. You don’t need to know everything at this stage, but make your best guess while keeping your projections reasonable. Remember, the more thorough, the better. 
  • Tax Returns – Provide copies of your last two to three years of tax returns. Lenders will want to see what your previous income was.
  • Licensing/Certifications – Bring along your documentation proving that you are a qualified and experienced dentist.
  • Identification – All lenders will need to make copies of your identification. Make sure you bring at least two forms of ID, such as a driver’s license or your passport.

How to Apply for Dental Practice Financing

The most time-consuming aspect of setting up your practice will be securing the funding you need to get your business off the ground. Thankfully, the application process is essentially the same as applying for any other type of loan.

Follow these steps for securing dental practice financing.

Step One – Compare Lending Options

The first step is to find a lender that fits your requirements. First, you will need to pinpoint your ideal lending option and then shortlist some lenders that provide that option. Using loan comparison platforms can help you slash the time you spend tracking down lenders and figuring out their rates.

Take your time with this step. Thousands of lenders across the country offer different terms and conditions. Make sure you leave enough time to apply for your loan. Some lending options may take weeks to approve, whereas others may take months.

Step Two – Complete the Lender’s Application Form

Most application forms ask the same questions. You will need to enter some basic details about you and your proposed business.

Many lenders use automated verification systems, so ensure you fill out every field to the best of your ability. You may even be able to attach documents to your initial application form. If this is the case, now is the time to attach your completed business plan.

Step Three – Provide Company Accounts (For Existing Businesses)

Step three applies to established dental practices only. If you’re applying for financing to get a new piece of equipment, make your latest hire, or expand your operations, you will need to provide a copy of your recent company accounts.

Go as far back as you possibly can. Generally, two to three years should be enough, but providing this information won’t harm your application if you have five-year accounts. If you’ve yet to establish your business, you will be able to supply your salary/tax returns from the last few years.

Step Four – Wait for an Answer

Lender waiting times vary from lender to lender. However, you can typically expect to hear back within a few days to a week. Many lenders may ask you for additional documentation or want to speak to you directly.

Expect to be asked for further details if you’re a new business, have an average credit score, or you’re asking for a sizable loan amount.

Step Five – Receive Your Money

If accepted for a dental practice loan, the money should take just a few business days to arrive in your business bank account. You will now be free to spend the money in accordance with your loan’s terms. You will begin making your repayments immediately.

If rejected, begin searching for other lenders who may be willing to lend to you.

Find Your Funding with L3

Applying for financing is the single most crucial step in launching your dental practice. With so many financing options and lenders to deal with, the process may feel overwhelming. 

Get the help and financing you need with L3 Funding. Our team has a long history of helping small business owners secure the financing that makes sense for their ventures.

We also provide merchant cash advances for businesses that need money fast. To learn more about merchant funding or other lending options, contact L3 Funding today.

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Business Loans Business Planning Uncategorized

A Physician’s Guide to Medical Practice Loans | L3 Funding

How to Secure Medical Practice Financing: A Comprehensive Guide

As a new physician, you likely envision opening a medical practice. Starting a business from the ground up is exciting and empowering. You now have a say in how things run, and control of the company is in your hands.

However, you can only achieve these results once your business is off the ground and running. The standard avenue toward reaching this goal is through medical practice loans.

Today, let’s dive into how to start a medical practice with minimal self-investment and how to get approved for a physician practice loan that can help you make it happen.

What is Medical Practice Financing?

Medicine financing is an essential source of financing for medical practice, specifically for doctors and other medical professionals.

Medical practice financing typically consists of two main components: revenue sharing for services and risk-sharing for the investment in the doctor-patient relationship. The structure of funding for medical practice is determined by various factors, including the amount of reimbursement doctors can claim, the amount of risk in the investment, and the degree to which the risk is shared.

However, medical practice financing has changed over the years, and the current model is very different from the old.

Regarding the changing landscape of funding for medical practice, you’ll be better served with a continuously evolving model in response to the changing needs of your organization and your practice.

Once you’ve acquired a medical practice loan, it’s possible to use this finance for various purposes, such as operational expenditures, purchasing stock or equipment, buying an existing practice, or beginning a new practice.

Common Types of Medical Practice Loans

Many financial organizations, including banks, internet lenders, and other businesses, offer medical business loans. Occasionally, you may be able to get private funding.

For medical practice lenders, these are some of the most common options:

Small Business Administration (SBA)

The Small Business Administration (SBA) does not provide small business loans directly to medical practitioners but instead works with lenders. It is easier for lenders to lend to small firms since the government backs SBA loans. A variety of funding options are available through SBA-affiliated lenders.

These medical practice loans are available in various amounts, allowing doctors to get the capital they need to grow their practices. SBA loans often include cheaper down payments, competitive interest rates, and other advantages. In some cases, the SBA does not need security for loans.

SBA loans may be an alternative if you’re experiencing trouble securing a loan from other lenders.

Bank Loans

If you want a medical private practice loan through a typical bank or credit union, weigh the benefits and drawbacks carefully. It’s possible to receive cheap interest and extended payment periods, but additional restrictions exist on how you may use the money in your medical business. If you’re looking for a traditional loan from a bank or credit union and have terrible credit, you could have trouble finding a lender that will accept your application. As a result, your ambitions for your medical practice may be put on hold while you wait for a loan. On the other hand, online lenders can provide finance far more quickly and with fewer requirements than traditional financial institutions.

Online Lenders

Online lenders have much better acceptance rates for small business loans than banks and credit unions. If starting a medical practice, you may look at online lenders, which have more permissive rules and are more inclined to support early-stage businesses.

Most of the time, capital is available for withdrawal within 24 hours or less. Many other types of loans are available, including term loans, lines of credit, invoice finance, etc. In addition, internet lenders are well-known for their lightning-fast loan approval processes.

Term Loans

A term loan usually comes to mind when you think of a standard company loan. Loans are repaid by the borrower over a predetermined period, including interest.

These medical practice term loans, like the bank loans we covered, are suited to the needs of physicians and specialists. You would use a medical-only alternative lender instead of a typical bank for this type of loan rather than the general public.

What are the main differences between this loan and a bank loan? What we mean is this: As small company owners had challenges getting funding from traditional banks during the financial crisis of 2008, the rise of alternative lending emerged. Accessibility and cost are the two main factors in this situation. Many more borrowers now have access to funding choices since non-bank internet lenders have lowered their qualifying rules, making it easier for them to qualify. However, because lenders are taking on greater risk by making these loans, borrowers must pay a higher interest rate.

In addition, even if the loan conditions are favorable, some medical financing companies have strict requirements for the customers they select. To get a business loan, you may need to be in the company for several years with an excellent credit history and have a sizable yearly income to meet their criteria.

Business Lines of Credit

It’s not uncommon to see comparisons between business lines of credit and credit cards. There is a reason for this: Lines of credit have more significant financing and cheaper interest rates than personal loans.

Regarding funding, there are several advantages to using this method. You’ll be given a predetermined credit limit from which you can draw as needed. You will only be charged interest on what you borrow. There will be more money available for use when your balance is reduced.

When you aren’t sure exactly how much a project or refurbishment will cost, a business line of credit might come in handy. It is possible to utilize them to support a wide range of business needs, including running costs, supplier purchases, advertising, renovations, staff compensation, and more.

Equipment Loans

A medical equipment loan is primarily used to finance the establishment of new healthcare firms, the expansion of existing facilities, and the upgrading of medical equipment. It’s a long-term loan that needs to be backed by collateral and can also be used for the company’s supplementary needs. Businesses can borrow money at a low-interest rate and choose their payback terms. This form of loan is available from several well-known financial institutions around the country.

The firm will require additional financing to keep up with the demand for medical services. The following are a few of the most critical aspects of this loan:

  • To use the loan, you must only purchase medical equipment and its associated needs.
  • Banks cater to the specific financial requirements of healthcare providers with a range of tailored services.
  • The time it takes to repay a loan typically varies from 12 to 84 months.
  • Lenders give financial support at affordable rates and, more crucially, provide solutions specific to the company’s needs because of the nature of large projects.
  • Loans beyond a particular amount need collateral.
  • Finance for medical equipment, projects, operating capital, and other credit requirements are covered by the loan.

Who Can Apply for a Medical Practice Loan? 

Many different types of healthcare and wellness businesses might benefit from medical practice funding. Regarding the nature of your services, lenders aren’t likely to be overly picky.

Medical practice loans have been authorized for the following types of businesses:

  • Physicians
  • Plastic surgeons
  • Mental health specialists
  • Optometrists
  • Pediatricians
  • Dermatologists
  • Wellness professions (such as Chiropractic)

Medical Practice Loans: Things to Consider 

Regardless of the sort of loan or other financing option you choose, there are standard criteria for medical practice loans. As a result, it’s a good idea to plan, especially if you have a poor credit rating and will take some time to improve it or locate all necessary paperwork and licenses.

Financials

Potential lenders will examine your personal and business finances to assess whether your medical practice is worth the risk they would take by granting you a physician business loan. You may be asked to provide various financial documents when applying for a personal loan. The list of items may include your most recent personal and business financial records (such as bank and credit card statements), your most recent tax return (if you have one), and information about any previous business loans. Whether your medical practice is a new venture or has a long history will affect the documentation needed. The sort of medical practice financing you are eligible for will be influenced by the length of time you’ve been in business.

Creditworthiness

Prospective medical practice lenders will heavily weigh your credit score when evaluating your application for any financing. You need “good” or “excellent” credit to get the interest rates and repayment condition score. Don’t give up if your credit score isn’t at least 680 out of a possible 850. It is possible to acquire financing for your medical business from various lenders. If your credit score isn’t entirely where you’d like it to be, online marketplaces with several lending partners may be able to help. You may improve your credit score by paying your bills on time and managing your creditor mix and the number of recent queries.

Licenses and Documentation

A vast array of legal documents, business permits, medical licenses, and registrations accompany your professional qualifications. These documents may already be in your possession, or you may have to search for them. Depending on which sort of medical practice loan you are applying for, your lender may or may not require these papers. All of this depends on the kind of finance, lender, and practice you run.

Collateral

To secure a medical practice loan, your lender may require that you provide collateral. Most doctor practice financing doesn’t require collateral since you may use the medical equipment you’re purchasing as collateral. If you default on a loan or payment, the lender has the right to seize your collateral.

Medical Practice Funding: How Does It Work? 

Funding for medical practices can assist doctors in overcoming the specific difficulties they face, including:

Inventory

Due to the high cost of medical supplies and the challenges of collecting payment from patients, keeping an adequate supply can be problematic.

Equipment

In addition to standard equipment such as exam tables and computer software, medical practices of all specializations will require specialist equipment, such as radiography, defibrillators, EKG machines, lab equipment, and imaging equipment. The equipment they need all depends on their area of expertise

Technology

Streamlining patient communication, enhancing billing processes, and making it simpler to exchange information with other physicians or between locations are some benefits of digitizing medical data. 

Collections

Slow-paying insurance companies, Medicare and Medicaid payment delays, and non-paying clients can lead to cash flow issues for small business owners.

Insurance

Due to the elevated danger of sickness, medical practices require particular types of insurance, such as malpractice and workers’ compensation. 

COVID-19

Many medical offices are battling to stay open with fewer patients allowed in at a time, service limits, and higher costs for personal protective equipment (PPE) and other preventive measures.

If you’re a medical practice, you may use medical practice funds for more than just getting through tough times.

Real Estate

Purchasing your office space may lower your monthly expenditures while increasing your assets, extending your firm to another location. 

Purchasing a Practice

Instead of beginning from scratch, buy an existing one with a business loan. To sell a medical practice, many retiring physicians are looking for the next generation of doctors (with a good credit rating!)

Expanding your business by serving additional areas, providing new services, and adding new patients is also an excellent method to do so without making significant expenditures in marketing or development.

Hiring Employees

Taking on more patients without compromising the quality of care is possible with additional doctors, nurses, and other support staff to your team.

Marketing

When starting a new practice or moving to a new location, adding new staff and accommodating more patients, or offering new or extended services, it’s imperative to advertise your clinic, whether it’s through print ads, a website redesign, or direct marketing.

Finance Your Practice with L3

Getting a medical practice off the ground requires considerable knowledge and understanding surrounding the potential investments you can acquire before you start seeing patients. 

To help medical and wellness practitioners realize their company aspirations, L3 Funding offers a wide range of financial services, including merchant cash advances, business loans, and other options.

Learn more about medical practice financing or apply for merchant funding with L3 today!

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Business Loans Business Planning Equipment Financing SBA Uncategorized

Running a Franchise: Loans & Financing Options | L3

The Complete Guide to Franchise Funding

Starting a business from scratch is a highly challenging endeavor, yet building a recognizable brand from nothing is even more difficult. Running a franchise gives you access to a known brand’s trademarks, knowledge, processes, and name.

Brands from fast food to pest control have jumped into the franchising industry to expand their reach and boost their profiles rapidly. In fact, it’s estimated that the U.S. has 750,000 franchise businesses alone.

Today, we’re going to discuss how franchise business loans work and how to get a franchise loan.

What are Franchise Loans?

Franchises can do a lot for anyone who wants to start a new venture under their banner, but it’s crucial to develop a plan for financing a franchise.

The initial cost is paying the startup and licensing fee. These charges depend on the franchise, with more prominent brand names, such as McDonald’s, charging more than those who haven’t been in the business for long.

Franchise costs can range from a few thousand dollars to a few million dollars. Beyond the initial startup fees, you’ll likely have to pay ongoing fees to maintain control of your franchise. Entrepreneurs with little starting capital can obtain specialized franchise financing to cover these costs.

These loans work in much the same way as any other loan. You receive a lump sum and make regular monthly repayments until you’ve paid the loan off. These loans may be used for any associated business expenses.

Generally, financing a franchise will require you to put up at least 10-30% of the money from your personal funds. Lenders want to see that you’ve got some skin in the game.

Common Costs of Running a Franchise

With few limits on what you can spend the money on, what are the typical costs you’ll likely encounter when running a franchise?

Franchises put strict limits on business location, activities, prices, etc. Before committing to any one franchise, you’ll be able to receive an estimate on your build-out costs.

  • Franchise Fees – Franchising fees are the largest cost you incur during your first year. These commonly cost tens of thousands of dollars because you’re essentially renting the brand. A loan for a franchise can cover these fees and may also cover any ongoing license fees.
  • BuildOut Costs – Your build-out costs will vary depending on your business. For example, a mobile hotdog van or a pest control business will see few build-out costs. A new fast food outlet, on the other hand, will require all the equipment, fixtures, and fittings.
  • Working Capital – Most franchises will also provide detailed information on the amount of working capital required to keep your new business moving. A franchise loan can ensure you have the liquidity to maintain your business’s activities.
  • Supplies – Your basic supplies will be a regular ongoing cost. Again, the supplies and their cost will vary depending on the business. For example, a restaurant will need food, plates, cutlery, and napkins.
  • Inventory – Franchises will often stipulate a minimum amount of inventory to get started. Running a store may mean spending anything from $20,000 to $150,000 in stock to get moving.

As you can see, the costs of running a franchise go well beyond the franchising fees themselves. You’ll need a considerable amount of franchise funding to start all but the most minor franchises.

These are only a basic overview of costs. More formalized franchising programs may even require you to attend a training camp, which, again, can lead to you incurring travel and living expenses.

Types of Franchise Financing

There are lots of franchise funding options available, which means you need to weigh up your options and consider whether they fit your business plan. The right franchise loan can make your business, and the wrong one can break it. It’s essential to consider several options for franchise funds first.

Here are the main types of financing available to you.

U.S. Small Business Administration (SBA) Loans

SBA franchise loans cover up to 85% of a business’s loan amount. These loans are designed for small businesses to get off the ground. Although the SBA doesn’t offer financing itself, it works with banks, credit unions, and other lenders across the nation. They guarantee the loan, so lenders are more willing to support small business owners.

The security offered to borrowers and lenders is beneficial for both parties, making SBA franchise loans among the most helpful loan types in the country.

The best part is that you only need a minimum 500 FICO score, which is considerably lower than other lenders. You can also lend anything from $30,000 to $5,000,000. With no minimum monthly revenue requirements and payback periods up to 25 years, you’ve already got your business off on the right foot if you can obtain an SBA loan.

Startup Business Loans

Unfortunately, your franchise financing options are considerably more limited when starting a business from nothing. Startup business loans are an option if you’re searching for alternatives to fund your franchise.

Startup business loans are designed for those who have never owned a business before. They also offer super low-interest rates. Your existing FICO score will determine whether you’re eligible for financing.

Most lenders request a minimum of 680 on your credit score before they’ll consider lending. If you’ve got a poor credit score, you’ll need to work on building it up first.

Franchisor Financing

Some of the larger franchises may even offer their own financing departments. It makes sense from a financial standpoint because when franchise businesses pay interest rates and other fees under their banner, they create a recurring stream of income.

Franchisors that offer this service are free to divine whatever terms they like, so make sure you read through their terms and conditions carefully. Some offers of financing are better than others.

Different franchises will also have varying requirements. Some are more stringent regarding previous business experience and credit scores than traditional lenders. Read their Franchise Disclosure Document and study the brand before committing to anything.

Business Credit Cards

Taking out a business credit card will not enable you to cover the higher costs of doing business, but it can cover your smaller obligations.

For example, many businesses often put their supplies and some of their inventory on a business credit card to tide them over until the end of the month.

You’ll be able to obtain a business credit card when opening up your business bank account. Again, do your research and compare different business credit card offers.

How to Get a Franchise Funding

Securing a franchise loan doesn’t differ that much from any other form of financing. Applying for franchise financing is a matter of finding the right lender and sending them a strong application.

The basic steps for obtaining one of these franchise funding loans include:

  • Step One – Compare and contrast different funding options. You need the loan that best suits your new business. It’s always better to borrow less from the right lender than to borrow more from the wrong lender.
  • Step Two – Check the lender’s requirements. Make sure you meet those requirements before applying to avoid wasting your time. Many lenders use automated verification systems, so if you don’t meet the requirements, your application will never even be seen by a human.
  • Step Three – Submit your business plan. You obviously don’t have any current business accounts if you’re just getting started. Instead, you should have a comprehensive business plan explaining your franchise proposition and how you will grow that franchise.
  • Step Four – Wait for the lender to get back to you. Depending on which financing option you choose, this could be a few days or a few weeks. Be patient, and don’t be afraid to examine other options in the meantime.
  • Step Five – Get your money. If approved, you’ll likely receive the funds in your account within a few business days. If rejected, start the process again. Just because one lender didn’t approve you doesn’t mean another lender won’t.

Unlocking franchise funding is often the biggest hurdle entrepreneurs need to overcome. Be patient and be persistent. If you’re struggling to capture the interest of any lenders, you may need to work on your shortcomings as a prospective borrower and revisit once you’ve made some changes.

Tips for Getting Approved for a Franchise Loan

A loan for a franchise can launch your business and propel your career. Unfortunately, not everyone is an ideal candidate – at least initially.

Follow these tips to increase your chances of getting approved for a franchise loan.

Build Your Credit Score

Starting a new business means you don’t have a business credit score to fall back on. Instead, lenders will use your personal credit score to deduce your creditworthiness. Most lenders have minimum credit requirements, so make sure you obtain a free copy of your credit report first to find out where you lie.

So, what are some top tips for building your credit score?

  • Reduce your debt load
  • Improve your credit ratio
  • Make regular repayments on time

In many cases, taking out a credit card and making small purchases can build your score in the long term. If you have a poor credit score, this is an endeavor that could take months. Be patient and practice good credit habits until you meet the lender’s requirements.

Refine Your Business Plan

Lenders will want to see a copy of your business plan. It’s not just a roadmap for growth, but demonstrates your experience and commitment as a business owner.

The biggest mistake you can make is not being detailed enough in your business plan, with the second error being overstating your potential profits. Keep your plan modest and grounded in reality.

Increase Your Personal Capital

Lenders will seldom issue a significant loan for a new franchise business with no money down. It enhances the risk for the lender and, in theory, makes founders less motivated because they don’t have any personal financial stake in the business.

One way to get around constant rejection is to increase the personal capital you’re willing to put down. A few extra thousand dollars demonstrates to lenders that you’re serious about making your new franchise operation successful.

Get a Co-Applicant

Some lenders may also accent co-applicants on a loan application. A co-applicant is a guarantor of the loan, so if you fail to make the repayments, they will be on the hook to cover the loan. Think carefully about taking on a co-guarantor, as not every lender will accept them, and it can be tough to find a reliable one.

Start with a friend or family member and go from there.

Secure Franchise Funding with L3

Building a successful franchise requires hard work, time and dedication. Enlist the help of experienced professionals and have financial experts on your side. At L3 Funding, we specialize in supporting America’s small business community through intelligent resources, support, and financing options.

To learn more about merchant funding, contact L3 today. 

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Business Planning

Vending Machine Tips – Starting a Vending Machine Business

How to Break into the Vending Machine Business

While the vending machine business may no longer be a novel idea, it can still be a profitable venture. 

Learning how to invest in vending machines can open up passive revenue streams that many may overlook in specific locations. 

If you’ve been looking into different opportunities to enter a market as a new company owner, starting a vending machine business may be the right option for you. Investing in vending machines has all of the benefits of running a successful business without the risks associated with a brick-and-mortar store. 

Today, we will discuss how to get into the vending machine business while providing some helpful vending machine tips.

Advantages of Investing in Vending Machines

The vending machine business is booming, with a compounding growth of 9.4% expected to continue until 2025. 

By learning how to start a vending machine business, you’ll be entering a market that requires little start-up capital, has built-in flexibility, and provides an opportunity for passive income. 

As an owner of a successful vending machine business, the initial equipment necessary to run it will come down to a computer, printer, and phone. 

You’ll have the freedom to dictate your working hours as you manage and organize routes from the convenience of your phone. 

The vending machine business can be extremely lucrative while, at the same time, easily manageable. Many owners find that they want to learn how to start a vending machine business for free time and flexibility in their schedules. 

Here are some vending machine tips that can help you start your journey toward financial independence. 

Do Your Market Research

Breaking into the vending machine business doesn’t require an MBA or years of complex training. However, several aspects will require thorough analysis for the business to become a success. 

By conducting market research, you will be able to break down the costs associated with starting the business, the necessary time commitment, and when you can expect a profitable return on your investment. 

Decide on the Perfect Location

As the real estate mantra goes, location is everything. The difference between a well-trafficked site and one off the beaten path has a quantifiable impact on your sales figures.  

For optimal results, you will want to locate your vending machines in areas with robust walking traffic, such as:

  • Strip malls and shopping centers
  • Apartment complexes
  • Cafeterias 
  • Schools and universities
  • Hospitals and care centers
  • Hotels and motels
  • Laundromats
  • Transportation centers; airports, train stations, bus stations

Keep in mind that certain locations may require you to comply with regulations pertaining to the Americans with Disabilities Act (ADA.)

You will also want to secure a well-lit location, to avoid potential vandalism and theft. Having to replace merchandise or machinery can significantly impact your bottom line. 

Find Your Vending Machine

When the average American imagines a vending machine, it’s mostly relegated to drinks and snacks. However, if countries such as Japan have taught us anything, vending machines can dispense a variety of merchandise, and some are technical marvels. 

There are several options when choosing between the different types of available vending machines. Many of them provide unique forms of functionality, including:

  • Accepting various forms of payment
  • Enhanced user experience through interactive touch or voice-activated screens
  • Bulk candy dispensers
  • Full-line vending

One of the most profitable types of vending machines business models is to offer full-line vending.

This model will have several types of vending machines that offer a wide range of products, including:

  • Snacks
  • Coffee
  • Fresh fruit
  • Canned and bottled soda
  • Cold food
  • Frozen food, such as ice cream

Stock Your Inventory

Once you’ve found the perfect location and decided what you want to sell as a new business owner, it’s time to actually stock your inventory. 

Ensuring that your vending machines are consistently stocked is the key to a profitable business. However, you need to keep track of which items are performing well and which may not be suitable for the location’s demographic. 

For instance, if you have a beverage dispensing machine outside of a gym, you may notice that one sports drink brand significantly outperforms another. In this case, it’s a simple adjustment to what inventory you’ll reorder. If the trend continues in favor of a particular brand, you can begin negotiating with the distributor to better deal with bulk purchasing.  

Explore Your Financing Options

While the financial threshold of breaking into the vending machine business isn’t set very high, purchasing any equipment will require upfront capital. 

There are several different routes you can take when it comes to financing your business venture.

Vending Machine Equipment Financing

Equipment financing is a method of purchasing specific business equipment to get your company operational. The benefit of equipment financing is that it allows you access to modern technology without having to pay for it upfront, out-of-pocket.  It also comes with the advantage of being easier to obtain than a traditional small business loan issued by a bank since the equipment itself will be used as collateral. 

Equipment Leases

An equipment lease shares similar characteristics with equipment financing. The major difference is that you have the option to either re-sign the lease when the term is over or move on to another piece of equipment. 

L3 Funding

One of the easiest ways to secure the funding needed to start and operate a vending machine business is by contacting L3 Funding. We offer a wide range of merchant funding solutions, and we’re invested in the success of your business, as our success depends on yours. Apply for the small business working capital you need today!

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