Tips To Financing Your Education Franchise Business
The business opportunities in the education industry are massive. Governments of most countries in the bid to advance their country ensure that they invest massively in the education sector. The aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020, boosting the growth of the education industry.
Education business is trending in today’s time and it’s an ideal chance for entrepreneurs wishing to invest in the education system. One of the best ways of venturing into the burgeoning education market is by taking up a franchise of an education brand. With a proven business model, established a brand name, low-cost investment and franchisor support, education franchise is your ticket to success.
However, no matter how low the required investment amount is, you would still require capital for space, construction of state-of-the-art classrooms and other learning spaces, infrastructure building and maintenance, technology and tie-ups with foreign institutions, hiring the best teachers and instructors, etc.
Accumulating a huge sum of money can be strenuous for every aspiring edupreneurs, however, there is various financing opportunity available in the market to relieve you from the financial tension. Below are some tips to finance your education franchise business.
Small Business Administration Loan
If you are planning to start a small-scale education franchise business you can opt for a small business administration loan. The SBA is a federal government agency that provides financial assistance to new and existing businesses. Offices exist throughout the country to assist small businesses. Cash flow is the primary consideration for a loan. Owners with 20 percent or more ownership must personally guarantee the loan. Because there are three SBA loan programs, contact a local office or lender before completing an application to determine the plan best for your company.
SBI School Plus
The State Bank of India (SBI) offers School Plus, which intends to help in building educational institutions, maintain or upgrade their services and facilities. You can get the SBI School Plus under 2 kinds of loan – Working Capital Loan and Term Loan. This loan can be taken for any of the following reasons:
Buying land for building or playground
Construction of school building or auditorium
Starting the mid-day meal scheme
Repair or renovation of the existing building
Establish, expand, renovate or modernise educational institutions
Buying computer, laboratory or sports equipment
Buying furniture or fixtures
Buying books, software and other training material
A private loan is another option edupreneurs can adapt to finance their education business. Execute a loan note that defines the loan amount and terms, including the interest rate. This document becomes a business record that might affect business profit and taxes.
Lenders/Angel Investors/Venture Capitalists
Franchisees can also put forth their loan requests to a group of lenders. They can look for angel investors (individuals, often successful business people, who invest their own personal funds into a potentially rewarding business opportunity) as well.
Franchises can also explore the option of venture capital. It is the money given to companies by investment firms or individual investors known as venture capitalists. Only a small percentage of companies with high growth potential receive this type of funding as the venture capitalists are highly selective about where they plant their money, so if you think your education franchise business has the potential of high growth you can opt for this type of funding.
But make sure you have a well-crafted plan to give lenders a reason for investing in your business. The repayment time and the payment of interest also need to be adhered to.
Seeking a business partner is a secure & safe option for many soon-to-be edupreneurs. Most of the established businesses are owned in partnership. Entering into a partnership for your education franchise will assist you to procure funds as there are many people who would want to invest money and receive a percentage of the profits but would likely remain as “silent partner” in the business.
No matter which form of financial assistance you opt for, it is always advised to study its pros and cons before choosing it. Don’t hurry, as the success of your entrepreneurial dream largely depends on what’s fuelling it and how.