Which funding option is best for your breakfast franchise?
Once you’ve decided Huddle House breakfast franchise is the right company at the right time, you still have an important decision to make: How will you finance your diner franchise?
Because we are an iconic breakfast franchise that’s been around for 50 years, SBA loans and community bank financing are more accessible to our buyers than with many franchises. Our restaurants are fixtures in a community, providing jobs and gathering places in towns that may not have other options. Lenders know this, and that’s one reason our franchisees have a good track record of obtaining loans to start their business.
Our investment is very affordable for a full-service restaurant, but you still have to get your financing lined up. Understanding your options will make the process go that much more smoothly. Here are four ways to finance your Huddle House diner franchise:
- SBA loan.
Huddle House is on the Small Business Administration’s National Registry, which means our Financial Disclosure Document and operations have been vetted. Lenders can access that information, which minimizes and saves several steps in the SBA lending process for franchisees. The SBA offers several programs to help people finance their franchises, and these are good alternatives for someone who might not qualify for a traditional bank loan, according to the SBA website. Although the SBA doesn’t lend money directly to you, it will back the bank’s loan, giving the bank a little more leeway to approve a candidate who might not otherwise meet their criteria. SBA loans are a great place to start when looking at funding but you might find better rates at a local bank.
- Local or community bank loan.
Regional and community banks have much more personal relationships with their customers and may be able to offer you a loan package with better rates and lending terms than a large national bank. If you already do business with one of these banks, strike up a conversation with the bank’s commercial loan officer or speak with a branch manager. Banks of all sizes typically have two types of officers: retail staff and commercial staff. Try to avoid speaking with a retail officer — they aren’t equipped to handle a commercial loan request so ask who you should speak with.
- 401(k) rollover.
Many franchise owners get their start by essentially borrowing money from themselves. The laws allow you to access your 401(k) and IRA accounts without early-withdrawal penalties if you’re funding a business — as long as you follow certain legal steps. This is a particularly popular financing option because you can sidestep the banks, but you’ll still need to make sure everything is in order. You will mostly likely want to consult a professional accountant or your attorney about how to create a C corporation and a corporate retirement account. Accessing retirement funds has become a popular financing option since it allows you to sidestep banks and, in effect, loan money to yourself without incurring a penalty.
- Home equity loans.
If you’ve got a home or other investment property where you’ve built up equity over the years, you may also have a ready source of cash flow. A line of credit based on the amount of equity you have will put your investments to work for you, providing you with one of the least expensive avenues toward financing a new business venture.
While we can’t promise with 100% certainty that you will secure the right financing, we do make every effort to ensure you’re fully qualified by the time you get the point where you will apply for financing. We require $200,000 in minimum liquidity and a net worth of $600,000. And you can always rely on our in-house franchising experts to do everything we can to help you understand the process and point you in the right direction. Before you know it, you could be on the road to franchise ownership.
Learn more about Huddle House
Our Sandy Springs, GA-based franchise has more than 400 locations across the country, and our goal is to open another 175 in the next five years. Huddle House diner franchise is perfect for both the single-unit and multi-unit investors in a range of market sizes, including urban areas, small towns, travel centers and convenience sites. Huddle House offers incentives for adding additional units, including discounts on remodeling existing restaurants.
Typically open 24 hours, Huddle House serves any meal, anytime. If you think Huddle House might be the right franchise opportunity for you, please fill out this form to download our free franchising report, check out our research pages or call us at (770) 626-7286. We’d love to hear from you!