How Do I Finance the Business?
There are several ways to finance an Expedia CruiseShipCenters franchise
There are several options for financing the purchase of one of our travel franchises for sale. Here is a look at the most common avenues for financing, as well as the pros and cons of different types of financing:
1. Home equity loans
If you’ve owned a home for many years, there’s a good chance you can get a home equity line of credit (HELOC) or a home equity installment loan (HEIL) to finance your new business.
Advantages: They usually have a very low interest rate; they are highly flexible, often with no specific repayment schedule; and they don’t require a lot of documentation, such as an accounting of how the funds will be used. This provides more flexibility for your business.
Things you should know: You’ll need to show enough income to repay the loan through your existing sources of income — your projected earnings as a franchise owner won’t count when the lender calculates your ability to repay. A real estate appraisal will be required to establish your home’s value.
2. Leverage retirement funds tax-free and penalty-free
If you have retirement funds in a registered account like a 401(k) or an individual retirement account (IRA), it can be used to fund your franchise business without incurring early withdrawal penalties.
Advantages: Since it’s your money, not the bank’s, you don’t have to worry about a long loan-approval process. As your business succeeds, you make payments into your retirement account without having to pay interest to a bank. This option also allows you to keep cash in your bank accounts to be available for starting and growing your business.
Things you should know: Your business becomes your retirement plan. You should be confident that you can beat the stock market by building the value of your business.
3. Small Business Association (SBA) loans
These are government-backed loans at low market rates, which eliminates most of the risk for banks. Expedia® CruiseShipCenters® is an SBA approved franchise.
Advantages: You can finance a percentage of the cost of your business, which allows you to conserve cash; the interest rates tend to be fairly low; there is no prepayment penalty; and you can obtain better loan terms once you have a proven track record.
Things you should know: It can take three months or more to obtain an SBA loan, and the documentation process is extensive. The loan also requires 100 percent collateral. If most of your collateral comes from home equity, you may want to consider a home equity loan instead.
4. Friends and family
You may have friends or relatives who are willing to invest in your success.
Advantages: They know you, they are typically flexible on repayment terms and they may have expertise that they can offer your business. They may not require collateral.
Things you should know: If the business doesn’t meet expectations, it may strain your relationships. Family and friends may also seek equity in exchange for their investment, which would create a partnership arrangement.
Partnerships can allow two or more people to combine their resources to purchase an Expedia CruiseShipCenters franchise. If partners complement one another’s skill sets and add value to the business, it can be a great arrangement.
Advantages: You can split management and leadership duties, which gives you greater capacity and flexibility. Since you have multiple people to oversee operations and marketing, you may be able to grow faster.
Things you should know: Partners must have clear guidelines for who handles what and how profits are divided. In addition, to get the most out of your partnership and avoid disputes, clear communication and a shared commitment to the business are essential. A good partnership can be a bonanza. A poor partnership can be the most expensive form of financing — halving potential profits and multiplying frustration.
Continue Learning About Expedia CruiseShipCenters
For in-depth details about owning a business with Expedia CruiseShipCenters, download our free franchise report by filling out the form below. You can also learn more by reading the essentials about our franchise opportunity here.