HOW TO FINANCE YOUR NEW INSPECTION FRANCHISE December 13, 2022 | Business Tips , Franchise | inspection industry , entrepreneur , small business , money management By Shauna Nilsen, NPI, Inc.'s Recruitment Director Starting a new business is such an exciting and fulfilling venture, but for many people a lack of confidence in their funding strategy can hold them back from achieving their goals. As with all franchises, an inspection franchise requires a level of initial investment to get started, but you don’t need to wait for a wealthy relative’s inheritance. Depending on your background, there are plenty of worthwhile opportunities that you can consider in order to finance your new business and hit the ground running. Disclaimer: This content is meant for informational purposes only and should not be taken as professional legal, tax, investment, or financial advice. This article is intended to cover general circumstances and is not directed to any specific individual. I am not a registered financial advisor. To know what options are best for your particular scenario, seek out a financial advice professional. With that in mind, let’s discuss some financing opportunities for your new inspection franchise. Secured Or Unsecured Loans One common route that people looking to franchise end up discussing is the standard Secured or Unsecured Loan route. An easy way to separate these two categories of loans is to identify whether there is collateral being offered up in exchange for the loan. A loan backed by collateral is called a Secured Loan. Collateral can theoretically be any financial asset that a person owns, but in the franchising world, this usually is tied to either real estate or investment securities. Another loan that falls under this category is the Home Equity Loan. Home Equity Loans are a more commonly known loan, also sometimes called a “second mortgage,” that uses the equity built in a home as collateral. Although this sort of loan is a much rarer option in the home inspection franchising industry, it can be a valid option depending on your unique circumstances. On the other side of bank loans, Unsecured Loans are loans that require no collateral. These loans are heavily dependent on personal credit scores and previous debt repayment history. In addition, they typically have considerably higher interest rates than Secured Loans. Still, Unsecured Loans are a common option that many new franchisees take advantage of when setting up their new business. Rollover as Business Startups Another viable option for financing your franchise is a Rollover as Business Startups route, also abbreviated as ROBS. A ROBS involves tapping into a retirement account early and using the funds to start a new business or franchise. The risks with this strategy are obvious, in that most people would prefer not to touch their retirement savings until they have retired. However, some people like having the option to utilize this normally inaccessible source of funds as an investment. It is important to note that drawing from an account like a 401(k) requires operating the associated business as a C corporation. This business setup is more common for larger companies, and therefore might not be a great fit for small business ventures. SBA Bank Loans As a final financing option, and if some of the other options discussed here don’t seem to be a great match for your situation, a loan through the U.S. Small Business Administration (SBA) may be worth looking into. Contrary to the organization’s name, most loans administered through them tend to be for somewhat larger business ventures (often over $500,000 like in many 7(a) SBA loans). Because this scope doesn’t match up well with the range of a National Property Inspections franchise, prospective franchisees looking to work with an SBA loan should look at their Microloans. The SBA offers these smaller loans that reach their upper limit at $50,000, while averaging closer to $13,000. Although more of our franchisees have preferred other options, the SBA is still an available route for people looking to extend their choices. Choosing to start a new franchise means beginning a thrilling journey. Start with exploring these options to develop a confident franchising plan. To learn more about a franchising opportunity with National Property Inspections, request a free information packet today. We would also love to speak with you - email our recruitment team at firstname.lastname@example.org. About the Author Shauna Nilsen, Recruitment Director Shauna has 12 years experience in research and development of policies and procedures, and training manuals. She started at NPI in our National Accounts department, assisting with placement and follow-up of all inspection orders and invoicing. Shauna now leads NPI's Recruitment Department to onboard new NPI and GPI franchisees.