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What security can I use to secure funding for a franchise?

Q.

What security can I use to secure funding for a franchise?

Author: Brain Duckett

answered by Brain Duckett

Chairman of The Franchising Centre

Brian Duckett writes:

The most common asset used for security for a small business loan is property, including residential, commercial and rural land, although in some instances a lender may accept other balance sheet assets to secure a loan, including your cars and equipment.

In the end, it usually boils down to your home, assuming there is sufficient equity in it once any existing mortgage is taken into account, or perhaps the home of another family member or friend, depending on your circumstances. Possibly, commodities such as gold, silver or even antique furniture or paintings can be used, but not personal pension funds.

Whatever asset you use to secure your business loan, you can still sell it if you need to during the loan term, provided you obtain consent from the lender and offer another form of security to take its place.

Deciding whether or not to provide personal security for a business loan is a big decision, but then so is going into business in the first place. It’s also a sign of confidence and commitment. If you’re not prepared to back your own business plan, why should anyone else?

Brian Duckett is chairman of The Franchising Centre, part of the world’s largest network of specialist franchise consultants.

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