Financial assistance from Sberbank and VTB24 - how to get a loan to develop a franchise business. Loan for opening a franchise business

Franchising is a relatively new concept in Russian business. Its presence makes it possible for newly created companies not to spend money on their promotion, but to take advantage of an already well-known brand, adopting the business processes it has worked out. However, the more famous the brand, the more expensive the permit to work under its name costs. A franchise loan allows a beginning businessman to increase his chances of a successful start and operation.

Why do you need a franchise?

The parties involved in granting the rights to use a trademark or name are divided into:

• franchisee – a legal entity or entrepreneur who buys this right;
• franchisor is a party that sells the right to conduct a certain type of business using its personal developments.

Franchising on credit is quite common today, as it works under the wing of well-known brands. True, by using this service, a novice entrepreneur receives the following advantages:

• the risk of bankruptcy at the initial stage is reduced, since the company operates under the guise of a well-known brand with an already established base of regular customers;
• a novice businessman immediately receives proven business processes that have stood the test of time. He does not need to look for ways to solve certain problems, negotiate with suppliers, or establish business connections at his own peril and risk;
• ongoing training and support;
• the opportunity to use modern equipment and the latest ideas in business.

How to get a franchise

The ideal option is when a startuper has independently collected enough money to open a business and buy a franchise. However, this happens very rarely. In most cases, those new to business will need to take out a loan to purchase a franchise.

There are several options for the development of events:

• Franchisors who are interested in expanding their network and increasing profits from using a trademark or brand are themselves ready to issue a loan for a franchise. One of the popular forms of such cooperation is the opening of a point of sale by the franchisor. He hires staff, buys the premises, organizes the work with his own money. Then the already established business is transferred under the management of an entrepreneur or employee who has proven himself well, subject to a monthly fee, which includes the cost of opening a point and rent for using the brand. In this way, the franchisor covers its costs of opening a store, and over time begins to receive income.
• Cash loan. An aspiring entrepreneur can take out a loan against a franchise from a bank or other financial institution. However, this will not be a targeted loan. There are currently no programs in such areas in financial institutions.

Loans without checking the intended use of funds are ideal for purchasing a franchise. Every bank has them.

A cash loan can be obtained either without collateral or with collateral: a guarantee or pledge of property. The latter options provide the opportunity to borrow a larger amount from a financial institution. It is also worth considering the fact that banks are reluctant to lend to start-up businessmen. In almost every institution, a mandatory condition for lending is at least a year or two of successful experience of the potential borrower.

• Business development loan. An entrepreneur who has been operating for a long time and already has a reputation as a good borrower can apply for a loan from a bank for business development. As a rule, this is an investment loan, the money for which he can use to purchase real estate, equipment, transport, and other fixed assets necessary to start a new activity. He can spend part of this money on buying a franchise - contribute.

Unfortunately, Russian banks do not have a targeted loan for starting a franchise business in their line of lending programs for small and medium-sized businesses.

• Borrow money from relatives and friends. If it is unrealistic to get a loan for a franchise business from a bank or other sources, you can resort to seeking financial assistance from friends or relatives. In this case, a novice entrepreneur will be able to receive money quickly and at minimal interest; but it is worth remembering that if the business fails, there is a big risk of ruining relations with creditors.

Loan programs from Russian banks

As already mentioned, you cannot take out a franchise loan without a down payment or with any other conditions - but you can choose a loan without checking the intended use. Such loans are issued by Sberbank, VTB24, and other financial institutions.

Savings Bank of Russia

At Sberbank, two loan programs are available to a small business representative, where the money received can be used for any purpose, including. There is, however, one negative point here - the potential borrower must have been running a business for at least 24 months. However, if this condition is met, he will be able to receive financing in the amount of up to 5 million rubles for a period of up to 3 years, from 16% per annum.

Bank VTB24

VTB24 offers entrepreneurs and business owners to use the Kommersant program. According to the terms of the product, the interest rate on the loan ranges from 15 to 21.5%. It depends on the availability of collateral and the category of the client.

If the borrower has already repeatedly applied for financing from VTB24 and is ready to provide collateral as a guarantee of fulfillment of accepted obligations, then the rate will be 15 or 16%, otherwise the loan fee will be higher. The maximum loan term is 3 years, the maximum amount of financing is 4 million rubles.

Russian Agricultural Bank

Rosselkhozbank can issue a loan to an entrepreneur without checking his business for a period of 1 year in the amount of up to 500 thousand rubles, without collateral, but with a guarantee. The borrower can use the money received for any needs of his business.

These are just a few possible options for getting a franchise loan. Unfortunately, Russian banks are not yet ready to finance entrepreneurs without experience of successful activities, since the conditions for doing business in Russia are tough and the likelihood of going broke is much higher than passing the break-even point.

Getting a loan from a bank - what you need to pay attention to: Video

Opening a bank is a very difficult task, because it requires spending a lot of effort and money. However, today there is a simpler solution to this problem. It consists of opening your own branch of a bank under a so-called franchise agreement.

Many commercial organizations today strive to expand the scope of their activities and cover as much territory as possible in a given market. This is quite a difficult task. Therefore, banks attract people from various cities of our country who would like to invest money in opening their branches.

This banking option is the simplest. After all, the person investing does not have to pay taxes, because the branch is not a legal entity. At the same time, the financial organization with which the franchise agreement has been signed is obliged to provide the branch with everything necessary - from software to the organization of banking services.

Franchise conditions can be very different. This largely depends on the region in which it is planned to open a branch, and on which banks will be located nearby. Opening a branch of a small bank or commercial organization is considered the most successful. In this case, the attitude of the bank will be more loyal. Large organizations often set very strict conditions.

Examples of several options for such programs

A bank franchise is a very common thing. Many financial organizations offer similar options for cooperation.

Examples include:

• Bank VTB 24;
• Home Credit Bank;
• Many other large organizations and not so large ones.

Let's look at how a franchise is organized with these two banks.

Opening of a branch of VTB 24 Bank

Yes, indeed, this bank decided to expand its ranks with new branches based on a franchise agreement. So far there are very few of them in our country. Still, VTB 24 is a fairly large bank and it imposes strict requirements on those who decide to open its representative office in their region.

The main requirement is the availability of a convenient location for the bank. If there is one, then half the work is already done. The next condition is the presence of good initial capital. The amount must be no less than 3 million rubles. Not to mention the staff and decoration of the premises.

Everything here should be at its best. The VTB 24 representative office is a good option, but it is quite expensive and may not be profitable.

VTB 24 is a large bank, but there are already many of its branches throughout the country. It is suitable for those who have been dealing with similar organizations for a long time, but not for beginners. For beginners, the best option is some small credit organization or bank focused specifically on loans. For example, Home Credit or Russian Standard. VTB 24 has a wide range of services, but also strict requirements.

How to become a Home Credit partner?

Here the situation is much simpler. To open, you must sign the appropriate bilateral agreement. In addition, for Home Credit Bank it is not necessary to have such large capital and premises as for VTB 24. A few tens of square meters and no more than a million rubles will be enough.

Home credit is focused primarily on issuing loans to individuals. At the same time, a minimum package of documents is required, so this organization can be opened in almost any small city. Loans are mainly provided for the purchase of household appliances, so the loan amounts and interest on them are quite high. This option is suitable for those who want to quickly justify their investment.

What is a last minute bank?

Sometimes, while looking for a franchise of a bank, you may come across an advertisement about the possibility of cooperation with a bank of last-minute tours. But this is not a financial company at all, but the largest network of travel agencies in our country. This is certainly not a bank, but the offer is quite interesting. After all, last-minute travel deals are a very profitable business that brings a lot of money to its owners.

To open a branch of such an organization, there is no need to collect a bunch of documents and rent a huge room. When people come to such organizations, they simply want to buy themselves a last-minute ticket to go on some extreme or romantic trips.

Of course, you can work under a franchise agreement with some other travel agency, but it is the bank of last-minute tours that is the most profitable investment when it comes to tourism. After all, many last-minute flights from major tour operators come here. This is the largest and most extensive company of its kind. The payback of the project may exceed all expectations.

Such a franchise can begin to make a profit within a month after starting work. This is especially striking in the summer, when a lot of people want to buy last-minute tickets to some resorts.

As shown above, today you can work under a franchise agreement with various organizations:

• with banks;
• with shops;
• with various agencies;

But before investing money in opening such projects, it is necessary to calculate all the risks and possible losses. As the examples described above show, a franchise is primarily a representative office of a company.

Therefore, it is necessary to competently follow its rules and laws so that financial investments are not in vain. Everyone has the right to choose their own business option, but a franchise is a ready-made project that is worth trying to take as a basis.

In this article we have collected the conditions of 7 banks that provide loans for the purchase of a franchise. We have also prepared business requirements and a list of documents that banks may require to provide a loan.

TOP 7 banks issuing franchise loans

If you need a loan to purchase a franchise, it is not at all necessary to look for only a highly specialized tariff from the bank. Non-targeted loans for small and medium-sized businesses also fit into this area.

Today, top banks offer the following rates:

Franchise loan at Sberbank

Some time ago, a loan program for franchising from Sberbank called “Business Start” was very popular. Many major franchised brands took part in it.

However, since 2015, the program has ceased to exist due to difficulties with recalculating business plans. Many novice franchisees declared themselves bankrupt and were unable to repay the loan, so Business Start was suspended by the bank’s management, and an alternative tariff never appeared.

Conditions

It's no secret that banks are cautious about financing startups in any business segment. To avoid losses, the financial institution carefully checks and analyzes the possible profitability of the project. But when the guarantor is the franchisor - the owner of the brand being opened - the bank slightly weakens its requirements.

A franchisee borrower is a more desirable client for a bank than a novice businessman who has neither a brand nor a proven business plan behind him. Therefore, targeted franchise loans are usually provided on more favorable terms. But still, as with any other loan product, the final interest rate, maximum amount and loan term are calculated in relation to the solvency of a particular businessman and the reliability of his business plan.

Even with a specialized program, it is unlikely that anyone will be able to get a loan for the full cost of the franchise. Typically banks require a down payment of 20-40% of the required amount.

What amount are we talking about?

The amount that the bank is willing to allocate to a client for the purchase of a franchise depends on the entrepreneur’s work experience, his current income, the collateral provided, and sometimes on the brand being purchased.

The average value ranges between 500,000 and 10,000,000 rubles.

Advantages and disadvantages of buying a franchise on credit

A franchise loan has its own advantages for the client. Among them:

• Quickly capture the market without the need to save on advertising and other things;
• Purchase of the most modern equipment recommended by the franchisor;
• Accelerated business activities - purchasing sufficient quantities of goods and materials;
• Discounts from the bank for franchisees of large and well-established chains (sometimes the franchisor even enters into an agreement with a financial institution under which all franchise buyers can receive a loan on favorable terms).

There are also weaknesses in lending for the purchase of a franchise. For example this:

• Short loan terms;
• Most programs require collateral and a guarantor;
• The need to carefully develop a business plan;
• Imposition by the bank of additional commissions and insurance.

Requirements for borrowers

The bank’s standard requirements for the recipient of a loan to purchase a franchise look like this:

• citizenship of the Russian Federation;
• registered business activity with an entry in the state register (Unified State Register of Legal Entities or Unified State Register of Entrepreneurs);
• conducting business for at least a certain period established by the bank (on average, about six months);
• positive credit history;
• the entrepreneur has another stable income or is willing to provide significant collateral.

Who cannot be a guarantor

The presence of a guarantor has a positive effect on the bank’s decision to issue a loan. The main condition for the guarantor is that he must have a good credit history. But not just anyone can become a guarantor. The following will be refused:

• persons under 26 or over 60 years of age;
• persons who are not citizens of the Russian Federation;
• businessmen of the same or lower level of financial solvency than the applicant;
• officials of the borrowing organization.

When it comes to a loan to purchase a franchise, the guarantor is most often the franchisor company. Usually it satisfies all the requirements of the bank, and at the same time remains an interested party.

Therefore, a businessman who is looking for a guarantor should first contact the owner of the acquired franchise.

Documents for legal entities

To receive a loan, legal entities must provide the bank with:

• passport of the company representative and document on his appointment to the position;
• certificate of state registration;
• extract from the unified state register;
• extracts from current current accounts;
• financial and tax reporting for the period established by the bank (from 3 months to a year);
• business licenses (if required);
• documents for the collateral provided;
• passports, income certificates, collateral and other documents of guarantors.

In addition to the main documents, the application usually requires the following:

• business plan with detailed calculation of payback (at least one year);
• confirmation from the franchisor of readiness to cooperate;
• documents confirming the final value of the business.

Documents for individual entrepreneurs

Individual entrepreneurs provide the bank with:

• passport;
• SNILS and military ID upon request of the bank;
• certificate of state registration and extract from the Unified State Register of Individual Entrepreneurs;
• income certificate (3-NDFL or 2-NDFL);
• bank statements;
• financial and tax reporting;
• patents and licenses (if required);
• documents for collateral and guarantors.

In addition, documents are required confirming the borrower’s intentions to use the loan specifically to purchase a franchise. They are the same as for an LLC: a business plan, a letter from the franchisor, calculation of the total cost of the project.

How to apply for a loan for a franchise

Some franchisors provide their partners with detailed instructions and recommendations on how to take out a loan for a franchise. If the brand owner does not provide such support, then the businessman will have to learn everything on his own. Although the list of required documents is large, the registration procedure itself does not contain anything complicated.

Stages of obtaining a loan:

1. Negotiations with the franchisor, conclusion of an agreement.
2. Business plan approval. Some franchise owners themselves develop a business plan for entrepreneurs, while others leave everything to the businessman to do on his own.
3. Selecting a bank. If the franchisor does not give recommendations regarding a bank where you can take out a loan on favorable terms, then the entrepreneur himself will have to study the offers. First of all, you need to study the reviews and opinions of former clients.
4. Submitting a loan application and necessary documents to the bank. Today, most banks allow you to do this both in person and through the official website.
5. Approval of the application, meeting with the bank manager.
6. Signing an agreement with the bank. At the same stage, the client must provide a full package of documents, including collateral and surety.
7. Payment of the down payment.
8. Receiving the required amount.

Difficulties in obtaining a loan and how to deal with them

In the process of applying for a loan, an entrepreneur may encounter certain pitfalls. If you know about them in advance, the procedure will go smoothly and without surprises.

Where to get money to buy a franchise

In addition to using a special bank loan, you can obtain the missing funds to purchase a franchise in other ways:

• Investors. Finding them is not easy, and even more difficult is to interest them and convince them of the potential benefits;
• Receiving funds from the franchisor— sometimes the franchise owner bears most of the costs of starting a business. The amount is returned gradually, from monthly income. Interest and other conditions are negotiated individually with the company;
• Loans from individuals (relatives, friends, partners). This is not always a desirable option, even if loved ones themselves offer to help with the financial side of the business. Practice shows that such measures can radically destroy even the warmest relationships;
• Participation in targeted programs for aspiring entrepreneurs. They are carried out by both state and non-state funds, business incubators and other structures. The main thing that an entrepreneur will need to apply for participation in the program is a well-developed, clear business plan;
• Non-targeted bank cash loans are issued by individuals for personal needs. Entrepreneurs who choose this option must not reveal their true purpose to the bank, otherwise the loan will be denied. Officially, such a loan can be issued for apartment renovation, purchase of household appliances, travel, and so on.

A loan to open a franchise business is an excellent way to quickly get into business and make a profit for those entrepreneurs who want to find their niche, but do not have the opportunity or desire to promote their own business.

Concluding an agreement with the franchisor (franchise owner) on the right to use his brand, advertising, methods of work and well-thought-out technologies for running your own business will allow you to go through all stages of the company’s development in a short time.

If an individual entrepreneur or LLC cannot find the required amount for using a franchise, he will be advised to apply for a loan from a bank.

Why do you need loans for a franchise business?

Opening a business according to the schemes of a well-known brand means real profit in a short time. Such a project is often thought out to the smallest detail: from the rules of work to the color design of the premises and the uniform of workers.

Thanks to a competent plan, an entrepreneur will be able to quickly launch his business and earn income by deducting a percentage (often not very significant) to the copyright holder.

And the receipt of funds from a financial organization in this case is supported by the interest of three parties at once:

• The franchisor (copyright holder) will receive additional outlets under its brand, additional income and popularity;
• A franchisee (entrepreneur) will be able to open his own business with a bank loan;
• The banking organization will be confident in receiving payments and interest, since programs from popular brands quickly pay for themselves and generate income for both parties.

Why is this beneficial?

Due to the lender's interest in reliable borrowers, obtaining a loan to open a franchise business can be easier and faster.

When applying to a bank for a loan to work on projects of a certain brand, an entrepreneur can count on receiving it as quickly as possible, which, in turn, affects:

• Fast start;
• Rapid business expansion;
• Maximum market coverage and attracting additional audiences;
• Possibility to purchase all necessary equipment at one time.

Franchisor support allows you to:

• Promote a popular brand name or trademark and generate income;
• Refuse to conduct advertising campaigns;
• Take ready-made personnel training programs.

When applying for funds to open a business, a novice franchisee may discover the negative aspects of this model.

Credit organizations issue loans under this program for a minimum period of time, during which it is impossible to recoup a running business. Mandatory conditions for the issuance of money will be the payment of collateral (in the form of the purchased property) and the presence of a guarantor.

In addition, some companies require a clear work plan: not everyone is ready to accept the project as the entrepreneur sees it.

The main “cons” of starting a franchise

The bank needs to insure its property, including loans issued to borrowers. Preferential lending does not exist in the Russian Federation, and franchising is associated with risks.

Accordingly, the rate may turn out to be huge - from 15 to 19% (in Europe, money is issued for similar purposes at 2-8%).

The cost of the actual payment may include other payments that will almost double the original interest amount.

VTB 24

A bank for those who need a large amount. VTB 24 is ready to issue up to 5,000,000 rubles for a period of up to 10 years at 16.5% per annum.

If the company is ready to provide accurate calculations of its income and expenses, VTB will reduce the rate to 13.5%. Well, for those who have already worked under the franchise model, VTB offers a minimum rate of 12.5%.

Opening

Offers a convenient system for selecting a franchisor and the opportunity to cooperate with companies ready to turn their enterprise into a franchise.

For young businesses, we offer profitable 10% per annum for an amount not exceeding 1,000,000 rubles for a period of up to 7 years.

When choosing a suitable program, the borrower should pay attention not only to favorable interest rates, but also to the proposed options for cooperation.

For example, Alfa Bank is ready to issue franchise loans to not the most popular enterprises - if the borrower provides a detailed and detailed plan with a well-thought-out program.

To successfully launch an enterprise, it is recommended to choose only reliable, proven and popular companies that enjoy the well-deserved love of customers or clients. This will allow you to unwind, pay off the loan with interest and start working in profit.

An important factor influencing success is the experience of the franchisee: not every popular brand is ready to cooperate with newcomers: lack of experience and inept management can lead to serious losses and termination of the cooperation agreement.

Franchising in Russia has recently become more in demand than ever before. The term “franchise” is known and understood even by those who have nothing to do with business. More and more new companies are deciding to scale their business through franchising. And it seems that only a few companies do not sell franchises. The banking industry is sensitive to market demand, understanding the prospects for future income, but not everything is simple.

Franchise on credit

Excited about a successful business concept but short on funds? There are several options for the development of events. One of them is to take out a loan for the franchise. Unfortunately, targeted franchising lending is practically non-existent in Russia. After all, franchising for banks is exactly the same startup as a regular business opening from scratch. In the case of a franchise loan, the experience of the borrower and the required amount matter to the bank. Based on these criteria, the bank’s offer and loan rate are formed. It is much easier to get a loan for a franchise if this is not the first business, but its diversification through a franchise, and the entrepreneur already has a history and an account with a commercial bank.

Scheme earlier

In the recent past, and in some companies even now, there has been a trend towards cash only. The buyer of the franchise is asked to take out a loan from a bank, but a consumer one, for personal needs, without mentioning a commercial concession agreement, and to bring crisp banknotes to the company without being tied to the bank. The scheme, of course, on the one hand, simplifies the borrower’s receipt of money, since the financial and credit organization will not waste time checking the franchisor. On the other hand, the lack of control on the part of the bank makes it impossible to thoroughly study the franchise seller using third-party funds.

Advantages and disadvantages

A consumer loan and a loan to purchase a franchise have significant differences. Borrowed funds for a franchise are targeted. Consequently, the bank will strictly, without embellishment, check the business model and financial and legal documents of the company that sells its product. It was noted earlier that the process of receiving funds will take longer, which is a minus, but the franchisor company will be studied under the “microscope of experts,” which is a plus. Naturally, banks differ in their approaches to assessment, approval, and refusal.

Leaders

Currently, the leaders in requests for information on franchise loans (according to Yandex statistics) are: Sberbank, VTB24 and Alfa-Bank. Users themselves are more focused not on the name of the bank, but on whether it is ready to issue a loan to open a franchise business without a down payment. It is important to note that banks consider franchising to be part of business processes, therefore loan products are provided in the business lending category.

Reviews about business loans

According to reviews from the Banki.ru website, all three leading banks (Sberbank, VTB24 and Alfa-Bank) have both positive and negative reviews on business loans. The reasons for approval and refusal are related to the assessment of the bank’s risks (financial and social). And the more trust the franchisor company deserves, the higher the chance of receiving approval. But the good reputation of a brand does not guarantee that a loan will be received. Risks are assessed not only on the part of the franchisor, but also on the part of the future franchisee.

"Sberbank" - franchise without loan

Sberbank took a different path in the matter of franchising lending - it approved, first of all, not the borrower, but the franchisor and his business plan. Before including the franchisor in the list of franchises being financed, Sberbank carried out a serious analysis of the franchisor’s documents and data on the turnover of franchise outlets. In total, during the existence of the program, several hundred franchises were included in the Sberbank franchise bank. Sberbank approved a loan for the acquisition of well-known franchises, such as Behemoth, 33 Penguins, 220 Volt, Icraft, Baon, Subway.

In general, the procedure was as follows: a business was opened by a company or individual entrepreneur who had not conducted business for 3 months. A guarantor was needed with a 2-NDFL certificate or declaration. The typical loan size is from 100 thousand rubles to 3 million rubles. If a larger amount is needed, the bank considered the request in a special manner and subject to the age limit for the borrower - 27 years. The lump sum contribution did not exceed 40% of the total amount. The maximum loan period is 3.5 years. Now Sberbank is not developing this loan product and has frozen the “business start” for an indefinite period.

Loan for Otkritie franchise

Otkritie Bank has a rate of 10% and above, taking into account the total volume of cooperation with the Bank, and under a special program from the SME Corporation - from 9.6% per annum. The loan period can be up to 7 years, with monthly repayment or according to an individual scheme. The bank willingly issues loans for franchises in commercial real estate (purchase of property, repair work, purchase and modification of equipment and movable assets). Issued as a lump sum or in the form of a credit line with different terms for the provision of borrowed funds. The collateral is transport or real estate.

Business loan from scratch from Tinkoff Bank

Tinkoff Bank belongs to those few financial and credit organizations that actively work with small businesses and individual entrepreneurs and reinforce their interest with a large percentage of loan approvals. Overdraft and standard lending are offered to potential clients. You can start applying for a loan on the bank’s website by submitting an application. After providing all the necessary documents, the bank will issue a lending verdict, and specialists will schedule a meeting, during which the loan agreement and the agreement to open a business account will be signed.

Loan from the franchisor

Some franchisors, especially those that have their own production, offer the most powerful partners in promising regions the opportunity to receive their franchise on credit. This is due to the need to expand distribution channels and increase production volumes. In this case, the franchisee may be offered to ship the goods on credit with the possibility of partial repayment in tranches or settlement with the franchisor upon the sale of the goods. Sometimes the franchisor provides franchisees with preferential terms for the supply of equipment - in fact, equipment is purchased on credit or lease. Most often, the franchisor’s assistance in obtaining a loan is manifested in his participation in drawing up a competent business plan for the bank and calculating the maximum permissible loan load based on the characteristics and seasonality of the business.

Expert opinion

Franchising specialists at FRANCON strongly recommend that you first request the conditions for using credit funds when purchasing a franchise. Many companies do not allow persons whose borrowed funds exceed 60% to enter into transactions. And it is important in the business plan to try to write down a payment schedule and indicate the amount of interest. Such measures will help eliminate the possibility of inaccuracies in calculations for making the final decision on concluding a contract.

Prospects

A franchise loan is an extremely popular banking product, and interest in it is gaining serious momentum. Small and medium-sized businesses are so closely connected with franchising that financial and credit organizations, with the support of government agencies, should prioritize franchise business lending in priority development schemes, with well-thought-out criteria for selecting conscientious and responsible franchisors. Of course, with full financial responsibility of the borrower, but with the possibility of a high-quality verification of the seller. And in this case, there are excellent prospects for a reduction in the loan rate, and therefore there will be a breakthrough in the credit issue for a franchise business.

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