Starting a franchise is an exciting step toward entrepreneurship, but one of the biggest hurdles is arranging capital. That’s where franchise funding from banks and NBFCs (Non-Banking Financial Companies) comes into play. Whether you’re launching a new franchise or expanding an existing one, knowing how to secure the right funding can make your journey smoother and less stressful.
💰 Why Franchise Funding Matters
Opening a franchise involves expenses like franchise fees, real estate, equipment, and working capital. Without proper franchise funding, many aspiring entrepreneurs struggle to get started. Banks and NBFCs offer multiple financing options, making them popular choices for franchisees.
Unlike starting an independent business, a franchise has an existing business model and brand reputation, which often increases the chances of loan approval. Lenders see franchises as less risky compared to startups since they’re built on proven systems.
🏦 Types of Franchise Funding from Banks
Banks remain the first choice for most franchise owners. Common options include:
- Term Loans – Fixed repayment loans for franchise fees, infrastructure, or setup.
- Working Capital Loans – For day-to-day operations like staff salaries or inventory.
- Loan Against Property – Securing funding by pledging property as collateral.
- Business Overdrafts – Flexible borrowing to cover unexpected expenses.
💡 Pro Tip: When seeking franchise funding from banks, ensure your repayment plan is realistic. Many entrepreneurs underestimate operational costs, which can lead to financial stress later.
🏢 Franchise Funding from NBFCs
NBFCs are emerging as strong alternatives to banks, especially for franchisees who want quicker approvals and flexible terms. They may charge slightly higher interest rates, but the franchise funding process is faster and less restrictive.
NBFCs often provide:
- Collateral-free loans for smaller amounts.
- Customized repayment schedules.
- Digital application and disbursement processes.
For many new franchisees, NBFCs are an excellent option when banks require extensive documentation. Additionally, NBFCs are known for supporting small-town entrepreneurs who may not have access to large banking networks.
📑 Documents Required for Franchise Funding
Whether you approach banks or NBFCs, prepare these essentials:
- Franchise agreement copy
- Business plan with revenue projections
- KYC documents (ID & address proof)
- Bank statements (last 6–12 months)
- Income proof / ITR filings
- Collateral documents (if applicable)
A strong, clear business plan showing your franchise’s earning potential can set you apart. Lenders want to see not just numbers, but also confidence that you can run the franchise successfully.
⚖️ Banks vs. NBFCs – Which Is Better for Franchise Funding?
| Factor | Banks | NBFCs |
|---|---|---|
| Approval Speed | Slower, more paperwork | Faster, less restrictive |
| Interest Rates | Generally lower | Slightly higher |
| Flexibility | Rigid terms | More customizable |
| Loan Size | Larger funding available | Often smaller loan amounts |
If you’re aiming for a high-investment franchise like in food & beverages or retail, banks might be better for larger loans. But for quick funding to launch service-based franchises, NBFCs are a strong choice.
🔑 Additional Franchise Funding Options
Apart from banks and NBFCs, franchisees can explore:
- Government Schemes & Subsidies – Some states provide MSME loans or incentives for first-time business owners.
- Angel Investors or Partnerships – Equity sharing with investors to raise capital.
- Crowdfunding – Innovative way to raise funds while marketing your franchise idea.
- Franchisor Financing – Some franchisors directly offer financial support or tie-ups with lending institutions.
By diversifying sources of franchise funding, you reduce dependency on one lender and increase your chances of securing the full amount you need.
🛠️ Tips to Secure Franchise Funding Easily
- Maintain a good credit score.
- Present a detailed business plan with revenue projections.
- Showcase the franchise brand strength to lenders.
- Build relationships with multiple lenders for better negotiation.
- Consult a franchise coach for funding strategies.
Remember, the stronger your financial profile and planning, the more confident lenders will feel in approving your franchise funding request.
👨🏫 Get Expert Guidance
Navigating franchise funding can feel overwhelming, especially with so many loan products and eligibility criteria. As a franchise coach, I help entrepreneurs like you secure the right funding option to start strong and scale confidently.
👉 Visit iamronak.com to book your free consultation and get personalized funding strategies.