Getting funding to start a business can be stressful, especially if you don’t have personal savings or a bank loan to cover startup costs. That’s when a professional finance service might be the answer. These companies can help you arrange franchise financing or raise capital for your own startup. However, you must research each loan option carefully. Make sure you understand the terms, repayment schedules and interest rates.

See our guide on how much it costs to start a car wash if you’re interested in preparing a business plan for prospective lenders.

What Is a Professional Finance Service

Professional finance services are companies that introduce entrepreneurs to different financing programs, from lines of credit to equipment financing. You share details like your credit score and financial details, and the companies match you to lenders that might be a good fit.

These online lending platforms highlight the simplicity and speed of their services. This makes them popular with startups and small business owners who want to pay franchisee fees, secure loans for business growth, including hiring staff, managing cash flow, buying equipment and so on.  

How It Works

Visit the professional services loan website. View your options and select your loan type. Then start the step-by-step application process. Most platforms will ask you questions like:

• How much funding do you need?
• What will you be using the money for? 
• What’s your credit score?
• How quickly do you need the funds?

Answering these questions helps the lender work out the best financing options for you. Then they’ll contact you for documents etc. For example, proof of your identity and a bank statement from the past three months. You don’t need to provide lots of supporting documentation as you would when going through a bank. 

The application process via professional financing services wins hands down compared to a bank’s requirements. According to some business financing companies, it can take just 60 seconds to fill out their application online.

Pros and Cons: Using a Professional Finance Service

Pros

Secures Funding Fast

Fast access to capital attracts people to online financing services. In some cases, funds arrive within 24 hours. Conversely, a bank may take months to approve funding, while a direct lender may take days or weeks to release your money.

Easier Loan Approval

Meeting approval requirements can be tough when you want to take out a business loan to fund your franchise business. If you have bad credit, a bank will most likely reject your application. But online financing services can work around bad credit because they set their own standards, looking beyond just your credit score.

Allows Flexible Payments

Starting a business can be challenging and unpredictable. When you take out a loan, flexible payment terms can help make the startup experience more manageable. You can choose a repayment schedule (i.e., regular and smaller amounts over a longer repayment term) to suit your specific needs.

Avoids Mixing Business with Family and Friends

Turning to family or friends for a loan might seem the easiest option, but is it a wise one? Those closest to you will want your new business venture to succeed. Not at their expense, though, which is inevitable if you run into difficulties with the repayments.

Using a professional services loan might cost you more in interest rates and fees, but it could save your personal relationships. Of course, the situation changes if family members or franchise partners are actively involved in the business and want to make it a success. 

In this instance, if family funding is on the table, involve a financial advisor or franchise lawyer before signing any loan documents or a franchise agreement.

Allows Multiple Loans at a Time

Professional financing services often allow you to take out as many loans as you like. This works in your favor if you have to cover a lot of costs. For example, equipment costs or marketing expenses. Several funding streams could help keep your business running smoothly. 

Willing to Work with Startups

Finding business financing can be tricky if you’re new to all of this. Traditional lenders are more risk-averse. Also, most banks have a meticulous, time-consuming application process, which can be off-putting. In contrast, you’ll find that some alternative financing services help startups get funding even with no business experience. So, you get to enjoy the benefits of franchising sooner.

Apply to Multiple Lenders at Once

They say time is money. With this in mind, it is tempting to turn to financing services that let you apply to multiple lenders in one go. This can speed up the loan application process.

No Collateral Requirements

If you shop around, you’ll discover that almost all banks require collateral for small business financing. Forms of collateral include cash, your house, your car or any business equipment. These assets are seized and sold if you default on the loan. 

However, financial institutions like National Business Capital say that a collateral requirement is not necessary. So, the good news is you won’t lose the roof over your head (or other assets) if the loan isn’t repaid. 

Cons: Professional Services Company Loans

Skipping Over Important Details

Doing everything fast means you risk not taking the time to fully understand the legal terms and conditions of any loan. And this can cause big problems down the line, like higher interest rates or hidden fees you didn’t notice at first.  

 Understandably, you want the money to fund your startup or franchise business sooner rather than later, but you should never rush a business decision. Before you sign anything:

• Read every part of the agreement carefully.
• Take legal advice if necessary.
• Discuss repayment plans and interest rates, which can be very high with some lenders.
• Compare loan rates and terms. 
• Shop around if you’re not happy with any of the details.
• Speak to a franchise consultant before making a final decision.

Higher Interest Rates 

Are you getting the best rates? And what about fees? Opaque fees are often a criticism of business financing platforms. Lenders are not always forthcoming about interest rates etc., until your application is being processed. If in doubt, talk to a financial advisor who can explain the true borrowing cost and whether a loan with flexible payments is manageable.

Debt Overload with Too Many Loans

Multiple loans sound great, but there’s an obvious downside. You’ll be juggling several repayments and interest rates. Therefore, you can easily become overwhelmed with a debt that you struggle to clear. Make sure your business has enough cash flow to keep up with repayments. 

Downside of Applying to Multiple Lenders 

Convenience comes at a cost. Business funding platforms can save you time by applying to multiple lenders at once, but you risk information overload. Different offers with varying terms, conditions and rates can be confusing. Also, your personal and business information will be shared more widely, which could lead to scams if you’re not dealing with a trustworthy provider. Limit your applications to the most promising options.

Disadvantages of an Unsecured Loan 

The lender will probably demand a much higher rate of interest on the loan. After all, this is how they make their money. Also, you’re still legally obliged to repay the debt, which comes out of your personal funds if your business account is empty.

How to Get a Franchise Loan with Bad Credit

The higher your credit score, the easier it is to get a loan with a lower interest rate. However, if you’re set on becoming a franchisee or starting a business on your own, the dream is not over if you have a low credit score. 

Online lenders are more likely to give you a franchise loan than a traditional bank. That’s because lenders like National Business Capital use advanced algorithms to review your application. They don’t just view your credit score. They’ll also look at your current income, cash flow, and franchise value. Don’t forget, you can improve your bad credit score, like paying your bills on time and reducing your debt as much as you can.

Also, research lenders that specialize in franchising. They focus on a solid franchise business model and an excellent business plan, not just a credit score. For example, some can advise on a rollover for business startups (ROBS). If you have a 401(k) retirement fund, you can access it early to fund your business without a credit check.

Unfortunately, fraudulent lenders and scams exist. And new business owners or entrepreneurs searching for franchise funding with bad credit are easy targets. So, always check company credentials, read reviews, and speak to franchisors for recommendations.

Examples of Professional Finance Services Company Loans 

• National Business Capital (NBC) can connect you to a marketplace of lenders offering SBA options and working capital loans to suit your circumstances, including car wash financing. 
• ApplePie Capital specialize in franchise loans. They already know about a business format franchise or a conversion franchise, so the approval process is often straightforward.
• Lendio describes itself as a small business financial solutions technology platform, connecting you to over 75 lending partners if you can’t get funding from your bank.
• Guidant Financial is another company that can help with franchise financing. Its options include rollover for business startups (ROBS), SBA 7(a) loans, and unsecured loans.

Are Professional Financing Loans for You?

Are these financial services for you? If you’ve struggled getting a traditional bank loan or just want to explore all your options, alternative lending platforms could help you out. They’re aimed at ambitious entrepreneurs and small businesses, with many focusing on prospective franchisees.

As with any financial decision, take time to gather as much information as possible before you make up your mind. Whether you use business financing companies or approach lenders directly, make sure you know what it will really cost you. Even SBA-approved franchises need careful research. 

Approaching Lenders Directly

If you’re unsure about using an online professional finance service, you can always contact lenders directly. Go in with a strong business plan and realistic financial projections, and you may succeed in securing funding.

For example, an SBA loan for franchise could be a good fit. These loans are backed by the Small Business Administration, a US government agency that supports entrepreneurs and small businesses. They tend to have longer repayment terms and lower interest rates, but they require more paperwork.

Conclusion

In summary, professional finance services give you access to funding when traditional banks turn you down. This might appeal to you if you’re a new entrepreneur or your credit score isn’t great. They offer speed and flexibility, which is ideal if you’re excited to make a success of your business. 

However, the best loan isn’t always the fastest. It’s the one that supports your long-term goals. So, do your due diligence, ask questions, and never feel rushed into making a decision.

If you’re looking for a proven franchise that’s appealing to lenders, DetailXPerts is an exciting opportunity. Our affordable mobile cleaning business model has multiple profit centers from eco-friendly car washes to commercial cleaning, giving you many ways to enjoy franchise growth.

Learn more about how much it costs to start a car wash if you’re interested in how we can help you secure the right funding for your business.