Lack of funds is a serious problem for an aspiring entrepreneur who plans to open a franchise business. If the franchisor does not provide loans to business partners, and the entrepreneur himself does not have free money, cannot find an investor and borrow from friends, then there is only one way - to take a loan to open a franchise business from a bank.
Important! Most small businesses do not pay off in the first few years after opening, so banks are reluctant to finance them.
If a loan is nevertheless issued, then subject to strict conditions: the presence of a business plan, the provision of collateral or surety. The hardest thing is getting the funds to open a business: financing a startup is the most risky venture for a bank. Therefore, the requirements for loans to finance small businesses are more stringent than for consumer loans to individuals.
Benefits of buying a franchise on credit:
- Faster time to market.
- Purchase of equipment and required amount products requested by the franchisor.
- No need to skimp on marketing.
- Preferential financing terms for franchisees if the franchisor has an agreement with the bank.
Difficulties in obtaining a loan to purchase a franchise:
- It is necessary to provide a detailed business development plan and evidence of the profitability of the enterprise.
- In many situations, security is required - a pledge of movable or immovable property, surety, guarantees.
- Reduced loan terms.
- Increased interest rates, as well as additional insurance that justifies the risks of a financial institution.
How to apply for a loan to start a franchise business
Some franchising programs require financing. In these cases, the franchisor gives business partners detailed recommendations on which financial institution to apply to, how to collect a package of documents. If support is not provided, the entrepreneur will have to go through the following steps on their own:
- Sign an agreement with the franchisor
- Draw up a solid business plan (if not included in the franchise package).
- Choose a bank that will issue funds for starting a franchise business. If there is no instruction from the parent company, you should first study the proposals of financial institutions.
- Submit an application for funding - this can be done both in the department and through the online form on the website.
- Meet with the manager if the application is approved.
- Prepare and provide a package of required documents, including for bail and surety.
- Sign an agreement with the bank.
- Pay the down payment.
- Get borrowed funds and repay them according to the established schedule.
Recently, Russian banks have begun to master the new kind activity is a franchise. , you can read the link. Many financial institutions are now interested in expanding their network, but they have limitations in Money Oh. Therefore, they offer novice entrepreneurs to become bankers.
Such partners take part in the expansion of the dealer network, sharing costs, responsibilities and future profits. An additional office of a certain commercial bank is a separate structure that will work on behalf of a banking institution and on behalf of it.
Goals and objectives of franchises from banks
The future banker is invited to open a branch of the bank through franchising. This is convenient for him, since the additional office will not pay taxes and does not provide reports to the IFTS.
He will work on behalf of the largest bank by proxy, which is a legal entity. A businessman is invited to be the head of a small financial organization, without incurring high costs and risks.
The main task of a franchise from a bank is the development of this financial institution. The branch manager will use a well-known trademark. If to speak plain language, then this process consists in representing a certain bank and selling banking products on its behalf.
The goals of a franchise from a bank include:
- providing loans to the population in a particular city;
- issuance of bank personal, deposit and salary cards;
- sale of insurance packages;
- leasing schemes and much more.
The banking institution will conduct free training for the partner and his staff, as well as provide financial support.
Bank Franchises in Russia - Overview
Currently, the following Russian banks provide loans for opening branches under the franchising program:
- Sberbank of Russia. The volume of investments is from 1 million rubles. The lump-sum contribution is 200 thousand rubles. Payback - 2 years. Interest on the provided loan for opening an office - from 16% per annum.
- VTB 24. Subsidiary credit structure “Leto Bank” and partner project “Let's go”. The volume of investments is 3 million rubles. The franchise fee must be at least 400 thousand rubles. Payback - 1.5 years. Interest on credit - 17%.
- Alfa Bank. The investment volume is within 1 million rubles. The lump-sum contribution is 250 thousand rubles. The payback of the project is 1.5 years. The partner will have to pay 17 percent per annum for obtaining a loan to purchase a franchise.
- OTP bank. It is necessary to make an investment of 1 million rubles. The contribution is 300 thousand rubles. The project will pay off within 2 years. The interest rate is 15% on the loan.
- AltaiEnergoBank. Franchise under the Instant Money brand. To connect to the program of this financial institution, an amount of 1 million rubles will be required. Payback is 1.5 years. The lump-sum contribution is 200 thousand rubles. Interest on credit - 18%.
All these banks understand the nuances of issuing investments for a franchise, so partners will work without any risks. For banking institutions, such activities make it possible to analyze the market in the regions, for example, in the Far East.
Clients who take similar loans to open offices again receive money at reduced rates. There are many more Russian banks that are beginning to explore the franchising market. Some of them are only thinking about attracting partners, while others are already implementing these programs.
The average income of a franchisee is from 450 thousand rubles per month.
Features of the franchise
The main features of the work on the franchise of banks:
- The franchisor guarantees all the necessary training in the process of developing a branch of a banking institution.
- A small down payment. If it is necessary to expand activities, then the partner must deposit additional amounts of money into the franchisor's account.
- Lack of competition, since the concept of each bank is to open no more than one branch in one regional territory.
- The franchise allows you to develop in several directions. For example, the provision of instant credit loans and car loans.
Calculation of approximate costs for starting a business
In order to open your branch of a banking institution under an affiliate program, you must have initial not less than one million rubles. Of these, about 17% - 20% will have to be paid immediately as a lump-sum contribution. The amount will depend on the requirements of the bank - 150 - 200 thousand rubles.
About 150 thousand rubles will be needed to purchase equipment and 200 thousand rubles to rent an office, wage employees, Internet communications, advertising costs, phone bills, and so on. In total, it turns out that in order to start a business such as a banking franchise you will need about 550 - 600 thousand rubles.
It is important to know that many banks take care of expenses starting from the third month of the existence of a franchise bank branch. Up to this point, you will have to pay all expenses yourself.
The costs of creating such a business are reasonable and every novice businessman will be able to open a bank office in his city under a special affiliate program. Some banks pay expenses already at the start franchisee. Therefore, it is worth clarifying and specifying all the conditions with the partner bank.
Learn more about franchising:
Profitability of opening a lending point about a bank franchise
The market in this area is arranged in such a way that the franchisor starts earning only when he starts working and issuing loans from the lending points opened under the franchise. Thanks to this, the franchisor:
- takes low monthly payments;
- requires a minimum percentage of revenue and profit;
- leaves almost 100% remuneration to his partner, which is received from clients.
The profitability of opening a point for issuing loans under a franchise of banks is:
- high economic indicators;
- high rates of sales of banking services, since the brand under which the partnership is formed is always recognizable and is well known to people;
- great immediate prospects. The popularity of loans is known to all people. Thanks to this service, you can make your dream come true;
- fast payback of credit points;
- entering a large market;
- lack of competition, which means there will be big sales, profits and so on.
Constant support by the franchisor's specialists helps to increase the economic performance of the lending point. This helps to avoid mistakes and use the experience of the partners' network members.
Article Summary
- Franchising banks is a new activity, but many financial institutions are beginning to master it.
- This type of business will bring big profits, as there are no competitors. After all, according to the rules of franchising, you can open only one branch of the partner's bank.
- The franchisor helps his partner develop the business: trains, provides financial support, and so on.
In the article, we have collected the conditions of 7 banks that give a loan to buy a franchise. We have also prepared business requirements and a list of documents that banks may require to provide a loan.
TOP-7 banks issuing a loan for a franchise
If you need a loan to buy a franchise, it is not at all necessary to look for a highly specialized rate in the bank. General purpose loans for small and medium-sized businesses also fit this direction.
Today, top banks offer the following rates:
Franchise loan at Sberbank
Some time ago, a loan program for franchising from Sberbank called "Business Start" was very popular. It was attended by many major franchised brands.
However, since 2015, the program has ceased to exist due to difficulties with the recalculation of business plans. A lot of novice franchisees declared themselves bankrupt and could not pay off the loan, so "Business Start" was suspended by the bank's management, and an alternative tariff did not appear.
Terms
It's no secret that banks are cautious about financing startups in any business segment. To avoid losses, the financial institution carefully checks and analyzes the possible profitability of the project. But when the franchisor, the owner of the brand being opened, acts as a guarantor, the bank relaxes its requirements a little.
A franchisee borrower is a more desirable client for a bank than a novice businessman who has neither a brand nor a proven business plan behind him. Therefore, targeted franchise loans are usually provided at more favorable terms. But all the same, as in any other loan product, the final interest rate, the maximum amount and term of the loan are calculated in relation to the solvency of a particular businessman and the reliability of his business plan.
Even under a specialized program, it is unlikely that anyone will be able to get a loan for the full cost of the franchise. Usually banks require an initial payment of 20-40% of the required amount.
What amount are we talking about?
The amount that the bank is willing to allocate to the client for the purchase of a franchise depends on the experience of the entrepreneur, his current income, the collateral provided, and sometimes on the brand being acquired.
The average value ranges between 500,000 and 10,000,000 rubles.
Advantages and disadvantages of buying a franchise on credit
A franchise loan has its own advantages for the client. Among them:
- Quick capture of the market without the need to save on advertising and other things;
- Purchase of the most modern equipment recommended by the franchisor;
- Accelerated economic activity - the purchase of a sufficient amount of goods and materials;
- Discounts from the bank for franchisees of large and popular networks (sometimes the franchisor even enters into an agreement with financial institution, under which all franchise buyers can receive a loan for favorable conditions).
There are also weaknesses in lending for the purchase of a franchise. For example, this:
- Short loan terms;
- Most programs require collateral and a guarantor;
- The need for a thorough business plan;
- Imposition by the bank of additional commissions and insurances.
Requirements for borrowers
The bank's standard requirements for the recipient of a loan to purchase a franchise are as follows:
- citizenship of the Russian Federation;
- registered entrepreneurial activity with an entry in the state register (EGRLE or EGRIP);
- doing business for at least a certain period established by the bank (on average, about six months);
- positive credit history;
- the presence of another stable income from the entrepreneur or the willingness to provide a significant collateral.
Who cannot be a guarantor
The presence of a guarantor has a positive effect on the bank's decision to issue a loan. The main condition for the guarantor is that he must have a good credit history. But not everyone can become a guarantor. Rejection will be:
- persons under 26 or over 60;
- persons who are not citizens of the Russian Federation;
- businessmen of the same or lower level of financial solvency than the applicant;
- officials of the borrowing organization.
When it comes to a loan for the purchase of a franchise, the franchisor is most often the guarantor. Usually it satisfies all the requirements of the bank, and at the same time remains an interested party.
Therefore, a businessman who is looking for a guarantor should first contact the owner of the acquired franchise.
Documents for legal entities
To get a loan legal entities must submit to the bank:
- passport of the representative of the company and a document on his appointment to the position;
- certificate of state registration;
- extract from the unified state register;
- statements from existing settlement accounts;
- financial and tax reporting for the period set by the bank (from 3 months to a year);
- business licenses (if required);
- documents for the provided collateral;
- passports, certificates of income, collateral and other documents of guarantors.
In addition to the main documents, the application is usually required to attach:
- business plan with a detailed payback calculation (at least one year);
- confirmation from the franchisor of readiness for cooperation;
- documents confirming the final value of the business.
Documents for IP
Individual entrepreneurs provide the bank with:
- the passport;
- SNILS and military ID at the request of the bank;
- certificate of state registration and extract from USRIP;
- income statement (3-NDFL or 2-NDFL);
- bank statements;
- financial and tax reporting;
- patents and licenses (if required);
- documents for collateral and guarantors.
In addition, documents are required confirming the borrower's intention to use the loan specifically for the purchase of a franchise. They are the same as for an LLC: a business plan, a letter from the franchisor, a calculation of the total cost of the project.
How to get a franchise loan
Some franchisors give their partners detailed instructions and advice on how to get a franchise loan. If the brand owner does not provide such support, then the businessman will have to master everything on his own. Although the list of required documents is long, the registration procedure itself does not contain anything complicated.
Stages of obtaining a loan:
- Negotiations with the franchisor, conclusion of the contract.
- Business plan approval. Some franchise owners themselves develop a business plan for entrepreneurs, others leave everything to the businessman to do everything on his own.
- Bank selection. If the franchisor does not give recommendations on a bank where you can take a loan on favorable terms, then the entrepreneur himself will have to study the proposals. First of all, you need to study the reviews and opinions of former customers.
- Submission to the bank of an application for a loan and the necessary documents. Today, most banks allow you to do this both in person and through the official website.
- Approval of the application, meeting with the bank manager.
- Signing an agreement with the bank. At the same stage, the client must provide a full package of documents, including collateral and surety.
- Payment of the down payment.
- Getting the required amount.
Difficulties in applying for a loan and how to deal with them
In the process of obtaining a loan, an entrepreneur may encounter certain pitfalls. If you know about them in advance, the procedure will go smoothly and without surprises.
| Problem | Solution |
| Among the tariff programs of the bank there is no specialized loan for the purchase of a franchise | If you have decided on a bank, and you are completely satisfied with its financing program, there is no need to look for a tariff with a narrow focus. Today, most loans are issued for investment purposes, without specification |
| The bank requests a business plan | It is easier for franchisees to draw up a payback plan for the enterprise, since the brand being opened already has its own history and experience. For help in drawing up a business plan, you can contact the franchisor |
| Insufficient funds for down payment | The down payment is usually quite an impressive amount, so entrepreneurs who do not have enough savings have to resort to various tricks: selling property, helping relatives and friends, getting an express loan from another bank |
| Sole Proprietor or LLC registered recently, which does not meet the requirements of the bank | Indeed, banks are reluctant to issue loans to businessmen holding a fresh certificate of state registration. If possible, it is better to register in advance, or choose a tariff with smaller amounts and higher percentages (which are provided to novice entrepreneurs) |
| No required security | Most banks are ready to provide, but you need to be prepared that the conditions for such a tariff will be much worse |
Where to get money to buy a franchise
In addition to using a special bank loan, you can get the missing funds to buy a franchise in other ways:
- Investors. Finding them is not easy, and even more difficult to interest and convince of the potential benefits;
- Receiving funds from the franchisor- sometimes the franchise owner takes on most of the costs of starting a business. The amount is returned gradually, from monthly revenue. Interest and other conditions are negotiated individually with the company;
- Loans from individuals (relatives, friends, partners). Not always a desirable option, even if relatives themselves offer to help with the financial side of the business. Practice shows that such measures can radically destroy even the warmest relations;
- Participation in targeted programs for start-up entrepreneurs. They are carried out by both state and non-state funds, business incubators and other structures. The main thing that an entrepreneur will need to apply for participation in the program is a well-developed clear business plan;
- Non-purpose bank loans in cash are issued individuals for personal needs. Entrepreneurs who choose this option must not disclose their true purpose to the bank, otherwise the loan will be denied. Officially, such a loan can be issued for apartment renovation, purchase household appliances, travel and so on.
A franchise loan is a great way to get up and running quickly and make a profit for those entrepreneurs who seek to find their niche, but do not have the ability or desire to promote their own business.
The conclusion of an agreement with the franchisor (franchise owner) on the right to use its brand, advertising, ways of working and well-thought-out technologies for running your own business will allow you to go through all the stages of the development of the company in a short time.
If an individual entrepreneur or LLC cannot find the required amount for using the franchise, he will be advised to apply for a loan from a bank.
Why do you need a loan for a franchise business?
Opening a business according to the schemes of a well-known brand is a real profit in a short time. Such a project is often thought out to the smallest detail: from the rules of doing work to color design premises and uniforms of workers.
Thanks to a competent plan, an entrepreneur will be able to quickly launch his business and earn income by deducting a percentage (often not very significant) to the copyright holder.
And the receipt of funds from a financial institution in this case is supported by the interest of three parties at once:
- The franchisor (right holder) will receive additional points under his brand, additional income and popularity;
- The franchisee (entrepreneur) will be able to open his own business on a bank loan;
- The banking organization will be sure of receiving payments and interest, as programs from popular brands quickly pay off and bring income to both parties.
Why is it beneficial?
Due to the interest of the lender in reliable borrowers, obtaining a loan to start a franchise business can be easier and faster.
When applying to a bank for a loan to work with projects of a certain brand, an entrepreneur can expect to receive it as quickly as possible, which, in turn, affects:
- Fast start;
- Rapid business expansion;
- Maximum market coverage and attraction of additional audience;
- Possibility to buy everything necessary equipment at once.
Support from the franchisor allows you to:
- Promote a popular brand name or trademark and earn income;
- Refuse to conduct advertising campaigns;
- Take ready-made staff training programs.
When applying for funds to open a business, a novice franchisee may find negative aspects of such a model.
Credit organizations issue loans under this program for a minimum period in which it is impossible to recoup a running business. Mandatory conditions for the issuance of money will be a deposit (in the form of acquired property) and the presence of a guarantor.
In addition, some companies require a clear work plan: not everyone is ready to accept the project as the entrepreneur sees it.
The main cons of starting a franchise
The bank needs to insure its property, including loans to borrowers. Concessional lending in Russian Federation does not exist, and franchising is associated with risks.
Accordingly, the rate can be huge - from 15 to 19% (in Europe, money is issued for similar purposes at 2-8%).
The cost of the actual payment may include other payments that will almost double the original amount of interest.
VTB 24
Bank for those who need a large amount. VTB 24 is ready to issue up to 5,000,000 rubles for up to 10 years at 16.5% per annum.
If the company is ready to provide accurate estimates of its income and expenses, VTB will cut the rate to 13.5%. Well, for those who have already worked on a franchise model, VTB offers a minimum rate of 12.5%.
Opening
It offers a convenient system for choosing a franchisor and the possibility of cooperation for companies that are ready to turn their business into a franchise.
For a young business, a profitable 10% per annum is offered for an amount not exceeding 1,000,000 rubles for up to 7 years.
When choosing a suitable program, the borrower should pay attention not only to favorable interest rates, but also to the proposed cooperation options.
For example, Alfa-Bank is ready to issue franchise loans even to not the most popular enterprises - if the borrower provides a detailed and detailed plan with a well-thought-out program.
For the successful launch of the enterprise, it is recommended to choose only reliable, proven and popular companies that enjoy the well-deserved love of buyers or customers. This will allow you to unwind, pay off the body with interest on the loan and start working in plus.
An important factor influencing success is the experience of the franchisee: not every popular brand is ready to cooperate with newcomers: lack of experience and inept management can lead to serious losses and termination of the cooperation agreement.
Franchising in Russia has recently been in demand more than ever. The term "franchise" is known and understood even by those who are not related to business. More and more new companies decide to scale their business under the franchising scheme. And it seems that only a few companies do not sell franchises. The banking sector is sensitive to market demand, understanding the prospect of future income, but not everything is unambiguously simple.
Franchise on credit
Encouraged by a successful business concept but lacking funds? There are several options for the development of events. One of them is to take out a franchise loan. Unfortunately, targeted lending for franchising in Russia is practically non-existent. After all, franchising for banks is exactly the same startup as the usual opening of a business from scratch. In the case of a franchise loan, the experience of the borrower and the required amount are important for the bank. According to these criteria, the bank's offer and the credit rate are formed. It is much easier to get a loan for a franchise if this is not the first business, but its diversification through a franchise, and the entrepreneur already has a history and an account in some commercial bank.
Scheme before
In the recent past, and in some companies even now, there are trends in receiving only cash. The franchise buyer is invited to take a loan from a bank, but a consumer loan, for personal needs, without mentioning a commercial concession agreement, and bring crisp banknotes to the company without being tied to a bank. The scheme, of course, on the one hand, simplifies the receipt of money by the borrower, since the financial and credit organization will not waste time checking the franchisor. On the other hand, the lack of control by the bank makes it impossible to thoroughly study the franchise seller by means of a third party.
Pros and cons
A consumer loan and a loan to purchase a franchise have significant differences. Franchise loans are earmarked. Consequently, the bank will strictly, without embellishment, check the business model and financial and legal documents of the company that sells its product. It was noted earlier that the process of obtaining funds will take longer, which is a minus, but the franchisor will be studied under the "expert microscope", which is a plus. Naturally, banks differ in their approaches to evaluation, approval, and refusals.
Leaders
Currently, the leaders in requests for information on franchise loans (according to Yandex statistics) are: Sberbank, VTB24 and Alfa-Bank. The users themselves more they are guided not by the name of the bank, but by whether it is ready to issue a loan to open a franchise business without a down payment. It is important to note that banks consider franchising to be part of their business processes, so lending products are provided under the business lending category.
Business loan reviews
According to the reviews of the Banki.ru website, all three leading banks (Sberbank, VTB24 and Alfa-Bank) have both positive and negative reviews on business loans. The reasons for approval and refusal are related to the assessment of the bank's risks (financial and social). And the more trust the franchisor deserves, the higher the chance of getting approval. But good reputation any brand does not guarantee that the loan will be received. Risks are assessed not only on the part of the franchisor, but also on the part of the future franchisee.
Sberbank - franchise without a loan
Sberbank took a different path in the issue of lending to franchising - it approved, first of all, not the borrower, but the franchisor and his business plan. Before including the franchisor in the list of credited franchises, Sberbank carried out a serious analysis of the franchisor's documents and data on the turnover of franchise outlets. In total, during the existence of the program, several hundred franchises have been included in the bank of Sberbank franchises. Sberbank approved a loan for the acquisition of well-known franchises such as Begemotik, 33 Penguins, 220 Volt, icraft, Baon, Subway.
In general, the procedure was as follows: a business was opened by a company or an individual entrepreneur who did not conduct business activities for 3 months. We needed a guarantor with a 2-personal income tax certificate or a declaration. The typical loan amount is from 100 thousand rubles to 3 million rubles. If a larger amount is needed, the bank considered the request in a special manner and with the age limit for the borrower - 27 years. The lump-sum contribution did not exceed 40% of total amount. The maximum loan period is 3.5 years. Now "Sberbank" is not engaged in the development of this loan product and has frozen the "business start" for an indefinite period.
Franchise loan "Opening"
Otkritie Bank has a rate of 10% or more, taking into account the total volume of cooperation with the Bank, and under a special program from the SME Corporation - from 9.6% per annum. The loan period can be up to 7 years, with monthly repayment or on an individual basis. The Bank willingly grants loans for franchises in terms of commercial real estate (purchase of property, repair work, purchase and completion of equipment and movable assets). Issued as a lump sum or as a line of credit with different terms provision of loans. The collateral is transport or real estate.
Business loan from scratch from Tinkoff Bank
Tinkoff Bank belongs to those few financial and credit organizations that actively work with small businesses and individual entrepreneurs and back up their interest with a large percentage of approvals for loans. Overdraft and standard lending are offered to potential clients. You can start applying for a loan on the bank's website by sending an application. After providing all the necessary documents, the bank will issue a verdict on lending, the specialists will make an appointment during which the signing of the loan agreement and the agreement on opening a business account will take place.
Loan from the franchisor
Some franchisors, especially those with own production, offer the most powerful partners in promising regions the opportunity to get their franchise on credit. This is due to the need to expand distribution channels and increase production volumes. In this case, the franchisee may be offered the shipment of goods on credit with the possibility of partial repayment in tranches or settlement with the franchisor upon the sale of the goods. Sometimes the franchisor provides the franchisee preferential terms supply of equipment - in fact, equipment is purchased on credit or leasing. Most often, the franchisor's assistance in obtaining a loan is manifested in his participation in the preparation of a competent business plan for the bank and the calculation of the maximum allowable loan burden based on the characteristics and seasonality of the business.
Expert opinion
FRANCON franchising specialists strongly recommend that you first request the conditions for using credit funds when purchasing a franchise. Many companies do not allow persons whose borrowed funds exceed 60% to conclude transactions. And it is important in the business plan to try to prescribe a payment schedule, indicate the amount of interest. Such measures will help eliminate the possibility of inaccuracies in the calculations for the final decision on the conclusion of the contract.
prospects
A franchise loan is a highly demanded banking product, the interest in which is gaining serious momentum. Small and medium business are so closely associated with franchising that financial and credit organizations, with the support of government agencies, should prioritize lending to franchised business development schemes, with well-thought-out criteria for selecting conscientious and responsible franchisors. Of course, with the full financial responsibility of the borrower, but with the possibility of a qualitative check of the seller. And in this case, there are excellent prospects for reducing the loan rate, and therefore there will be a breakthrough in the credit issue for the franchise business.
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