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In Capital Letters There are three things you simply have to know before financing a franchise: S-B-A.

By Devlin Smith

Opinions expressed by Entrepreneur contributors are their own.

There's no use waiting for cash to fall from the sky. To getfunding for your franchise, you have to know where to look.

According to Brad Gilbert, national franchise manager withComerica Bank, the best way for a prospective franchisee to getfinancing is via an SBA loan. "It's a great vehicle,"says Gilbert. "You're typically getting in with lessequity than with a conventional loan, and most lenders won'ttouch deals without that SBA guarantee."

The SBA offers two loans that can be used by franchisees: 7(a)and 504. The 504 is for real estate purchases only, whereas the7(a) can be used for a variety of other start-up expenses.

Gilbert offers the following for prospective franchisees tothink about when applying for SBA loans:

  • Can your franchise befinanced?

Before you set your heart on a particular franchise, determinehow likely it is to secure financing. Gilbert suggests askingbankers for their opinion on the franchise you'reconsidering.

  • Is your lenderSBA-preferred?

Make sure your bank meets this qualification. It'll save youtime in the loan process. "A preferred lender is able to makethe credit decision in-house without having to run everythingthrough the SBA regional office," Gilbert explains.

  • Are you doing yourpart?

Gilbert gives all clients a checklist when going through theapplication and closing process, and it's up to the borrower tomake sure it goes smoothly. "The borrower has to be responsiveand turn that list around quickly," he says, "because wewant to close as quickly as possible, and so do they."

Once your franchise opens and you consider opening morelocations, Gilbert says the loan process gets easier. "Thesecond and third stores are easier than the first," he says."You know what to expect from your contractors, employees andlenders. Everything becomes more routine."

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