If you're a quick-service restaurant (QSR) franchise owner looking to expand without bringing in additional investors, you may be wondering if there are financing products available based on your revenue. In this blog post, we'll discuss revenue-based loans, how they work, and how they can help finance your expansion plans.
What are Revenue-Based Loans? Revenue-based loans, also known as cash flow loans, are a type of financing that is based on a company's revenue. Rather than looking at collateral, revenue-based loans assess a company's cash flow and creditworthiness to determine loan eligibility.
How do Revenue-Based Loans work? Revenue-based loans work by providing businesses with a line of credit based on a percentage of their revenue. Typically, these loans have weekly, bi-monthly, or monthly payment options and are usually provided for a 12-month term. The loan amount can range from 7% to 20% of your revenue, and the loan can be closed within one to three business days if all the paperwork is in order.
Can Revenue-Based Loans be used for QSR franchise expansion? Yes, revenue-based loans can be a great option for QSR franchise owners who want to expand without bringing in additional investors. As mentioned in the video, if you've been in business for five years and have multiple franchise locations, you may be eligible for a revenue-based loan of up to $4.5 million.
What are the eligibility criteria for Revenue-Based Loans? To be eligible for a revenue-based loan, you must have a proven track record of revenue and profitability. This means you need to provide at least six months of bank statements, an application, a balance sheet, and a profit and loss (P&L) statement. The lender will also review your credit score, debt-to-income ratio, and other financial metrics to determine your eligibility.
Benefits of Revenue-Based Loans for QSR Franchise Owners Revenue-based loans offer several benefits for QSR franchise owners, including:
- No need for collateral: Unlike traditional loans, revenue-based loans do not require collateral.
- Fast approval and funding: Revenue-based loans can be approved and funded within one to three business days.
- Flexible repayment terms: Revenue-based loans offer flexible repayment terms, allowing you to choose weekly, bi-monthly, or monthly payment options.
- No dilution of ownership: Revenue-based loans allow you to retain full ownership of your QSR franchise without bringing in additional investors.
Conclusion In summary, revenue-based loans are a great option for QSR franchise owners looking to expand their business without bringing in additional investors. These loans are based on a company's revenue, offer flexible repayment terms, and can be approved and funded quickly. To be eligible for a revenue-based loan, you must have a proven track record of revenue and profitability, and provide the lender with the necessary financial documentation. If you're interested in learning more about revenue-based loans for your QSR franchise, book a call with a lender to discuss your options.