Getting franchise financing can help you with your business goals a lot. The right loan or lease makes every step of launching your franchise location easier, from getting real estate you like to outfitting your business location before opening day. How can you get the best results with financing? It’s important to avoid a few common mistakes and make smart decisions when it comes to the loans you want.

Choose a Lender That Offers Specific Franchise Financing

The first thing you should do when getting financing is choose the right lender. This is important for many reasons: getting approved, customizing your loan and having options for financing down the road. There’s a good chance you’re going to be relying on the same lender in the future when your new franchise has other capital needs, so building a long-term relationship is a good idea. That way, you can get better interest rates and easier approval.

Instead of focusing completely on the bottom line for a single loan, go with lenders that offer comprehensive financing for franchise businesses. These lenders have a lot of experiences with franchisees, so they understand the circumstances you’re going through. You can get financing that covers your needs better.

Don’t Use All of Your Working Capital

Depending on the type of franchise you’re investing in, there are probably going to be times when you need to make some down payments, such as when purchasing a piece of real estate or heavy machinery. That’s to be expected.

A common mistake, however, is trying to pay off a large percentage of your loan from the very beginning. As far as possible, don’t. Unless the loan terms require a down payment, keep your working capital for other needs.

For a franchise owner, working capital is like pure gold, helping you smooth out business operations and adapt to unexpected situations during the first six months or so. In fact, it’s generally a good idea to add working capital to the loan you apply for.

Set a Franchise Financing Budget and Stick to It

Just because you can qualify for a huge loan doesn’t necessarily mean you should go all out. This is another common mistake. Only get a loan amount that covers the needs and goals you have, plus a little extra for surprises. You can always get equipment financing down the road if you need it. Many lenders help you evaluate your true needs so you don’t feel pressured by debt.