• Make a list of the 10 fastest growing franchises in the country.
• Look for existing franchise networks in your target area.
• Keep up with franchise news.
• Check the minimum amount of capital required to open a franchise. For example, the investment for setting up a NIIT center can vary from Rs 12 lac to Rs 40 lac depending on the center location and types of courses offered.
• Research the required operational process flow. For example, a playschool would require several trained/untrained staff, teaching aids, play equipment, while a coaching center would employ apart-time faculty and a convenient location.
• Research royalty fees charged by the franchise management and the advertising and marketing support they provide.
• Research financial rankings of franchise networks. Banks rank franchises from grade A to D. A higher grade means lower down payment required, less paperwork and faster closing under startup business loan programs.

Typically, startup companies make the mistake of using their own money to buy equipment. Leasing is a much cheaper and easier alternative for financing equipment purchases. Any business with equipment can take advantage of this product.

With equipment as collateral, institutions lend at lower rates (sometimes by 100 to 300 basis points) and longer terms than unsecured financing. A typical equipment loan term extends anywhere from 3 to 5 years (based on the residual value) compared to an unsecured line of credit term of 2 to 5 years. Also, with equipment financing, small business owners can claim depreciation on their taxes. An equipment financing loan gives you the option to choose between a floating and a fixed rate line and does not require line rotation. The minimum value is about Rs 5 lac.

1.  Loans up to Rs 50 lac.

Financial assistance for SSI units is available from a variety of institutions, including SIDBI, State Financial Corporations, State Industrial Development Corporations and banks.

Loans supported by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) under the Risk Sharing Facility (RCF), currently a pilot project, aim to provide MSE Rs 50 lac to Rs 1 crore collateral free financing options. There are resources in place to provide a maximum of Rs 50 lac to cover 75  to 80 percent credit facility. Financing requests must be submitted to Member Lending Institutions (MLI). Loan  Depending on the policy of the MLI, a borrower may be required to pay a Guarantee Fee and Annual Service Fee, ranging from .75 to 1.5 percent of loan amount.

To get funding from any source, loan applications must include a project presentation, financial history of partners/directors, proof of possession of land/building, complete budgetary estimates and quotations for plant and machinery..

2.  Buy new equipment with someone else’s money.

Equipment financing is a cheaper financing alternative and requires less paperwork. Also, you can claim equipment depreciation on your taxes.

Typically, equipment financiers fund up to 50 to 75 percent of the equipment value for start up businesses. The minimum value of equipment is around Rs 5 lac for a period of 3 to 5 years. A Non-Banking Finance Company (NBFC) may offer credit on more convenient terms within standardized limits.

3.  Take a second lien on residential or commercial property.

Traditional commercial lenders take second liens on commercial property. In the majority of cases, the first lien is already taken by an existing mortgage lender.

Typically, interest rates are around prime, making it a cheaper financing alternative than a line of credit. Also, unlike a line of equity, second liens do not involve closing costs. Second mortgages or liens result in saving expenditure through refinancing. Interest rates on refinanced second mortgages are not taxable.