In a recent enlightening episode of the “Franchise Business Radio” podcast, Guidant Financial’s Senior Director of Sales and Business Development Ralph Nilssen made a prominent appearance, sharing insights beneficial to every franchise enthusiast.

Hosted by the esteemed Pam Currie of Franchise Business Radio, this podcast is a beacon for those seeking the latest in the franchise world. Currie, known for her deep knowledge of and passion for franchising, has consistently used the platform to shed light on industry trends, opportunities, and expert voices. This episode serves as a gold mine for anyone interested in franchising or looking to gain a richer understanding of Guidant Financial’s offerings. You can listen to the full podcast here.

About the Speakers

Ralph Nilssen brings enthusiasm and knowledge to the world of franchising and financing that comes with his two decades of experience. He plays a critical role at Guidant Financial as Senior Director of Sales and Business Development. He also served as a Franchise Finance Consultant at Guidant for several years, as well as a Business Development Officer.

Pam Currie is the host of Franchise Business Radio, a franchise advisor and a training and development consultant. She consults with aspiring business owners and investors interested in franchise opportunities, seeking to optimize their success and minimize any risks. She is also the Chief Operating Officer of Franchise City.

Franchise Business Radio Podcast Key Takeaways

Here are some of the top takeaways and highlights from the Franchise Business Radio podcast.

Franchising and Financing with Guidant

• When you’re involved in the franchise community, money is a very important piece of the puzzle. You need to ask, “What’s your funding strategy?” At Guidant, we want to understand an individual’s goals and then recommend a funding strategy. We ask: “What part of the life cycle of your business are you in?” For example, are you in one location, or in multiple locations?
• We are a total solution provider and experts in funding. Based on the franchisee or potential franchisee’s journey and goals, we develop customized recommendations and a path forward. We partner with franchisors, franchise consultants, real estate developers, Small Business Administration (SBA) lenders, and more.
• In franchise ownership, you will either finance it or get money from someone, like a lender. Self-financing is the quickest way, but not always the best strategic way. The best strategic way may be a loan, such as one backed by the SBA, which has advantageous terms. If you do a loan first, you can then open up a second franchise on your timetable, not on the bank’s timetable.

How Has the Market Changed?

• The banks have been tighter with credit since COVID, and interest rates have gone up very quickly in the last several years.
• As a result of a tightened credit profile and rising interest rates, the lending environment is a lot more difficult to navigate. But it’s important to remember that disclosure is more important than perfection when applying for a loan. 
• We’re seeing people losing hope that their 401(k) and other retirement funds will recover to previous levels. They want to invest in their business rather than wait for stock market recovery — and use their business to accelerate their retirement savings. 

Using Rollovers for Business Startups (ROBS) as a Franchise Financing Method

• ROBS is increasingly popular as a financing method because it’s part of a logical transition, where people are asking, “If I can buy stock in a publicly traded company, why not in a private one? In fact, why not in my own privately traded company?”
• When you use ROBS, your retirement plan becomes an investor in your business. ROBS lets you use your own retirement plans as financing: 401(k)s, Individual Retirement Accounts (IRAs) — many types of retirement plans are eligible. You can use up to 100 percent of your retirement savings, but you don’t have to use all of it.
• ROBS uses a specific system so that you don’t have a tax penalty for using your retirement funds to finance your business. Ordinarily, of course, if you withdraw tax-advantaged plans like 401(k)s, you are taxed on the withdrawal, plus you’re subject to a 10 percent penalty for early withdrawal if you’re not 59½ yet. But by using ROBS all of that is avoided. First, a new C Corporation is set up for your business. Then, a new retirement plan is set up for the C Corp., most commonly a 401(k). You then roll your retirement funds into the new C Corp.’s retirement plan. After that, the plan buys stock in the C Corp via a Qualified Employer Securities (QES) transaction. Once that is completed, your retirement funds are available to use in your new company.
• In the end, you can use ROBS to finance your franchise tax penalty-free — and debt-free. That’s a major advantage to ROBS: you do not owe any debt service, so all your profits can be used to benefit your franchise.
• Plus, if you use ROBS, you benefit from the growth and success of your franchise. You can pay yourself a salary and continue to save for retirement in your new franchise’s retirement plan.
• You can also use ROBS in combination with other funding methods. For example, many choose to use ROBS as a down payment on an SBA loan. Learn more here. 

Interested in learning more about ROBS? See What is ROBS? How 401(k) Business Financing Works to get started.

What Are Some Other Popular Franchise Funding Methods?

• ROBS is one of Guidant Financial’s most popular funding methods, because it allows you to invest in your own business and you start out debt-free. But not everyone has retirement funding they can use, so another popular franchising finance method is SBA loans. These are offered by banks and are backed by the SBA. The backing allows the banks to offer advantageous interest rates and terms (length of loans).
• Applying for an SBA loan is very paperwork-intensive. They are generally made for a 10-year term, and the maximum loan amount is usually $5 million.
• Then, there’s also a bank loan. In bank loans, the banks largely make the rules. Generally, they like to see a small business franchise pay a 20 percent to 30 percent down payment for a loan. Franchise owners may find it tough to get a bank loan unless they have significant experience. The size of bank loans can begin where SBA loans top out.
• Term loans are another option. Term loans don’t require a down payment, which can be an advantage. The loan approval process is also quicker. But they do have higher interest rates. One option for franchise funding is to get a term loan and then refinance for a better interest rate.
• You can pay off all types of bank and term loans without prepayment penalties.

Looking to fund your franchise? Check out our 7 Best Options for Small Business Funding.

Who Is the Typical Guidant Financial Customer?

• Our typical customer is in their mid-40s to early 60s. Many have been in corporate America. They now want control of their income and destiny. Many want to pass business ownership on to their children.
• We talked about the difference between the entrepreneur mindset and the employee mindset. Entrepreneurs want to take control of their future destiny, build wealth, and leave some community contribution or legacy.
• There’s also a franchipreneur mindset; the people who founded the franchise concept allow other entrepreneurs to receive that business recipe book with proven methods of operations, training, and support.

Guidant Financial Helps Current and Aspiring Franchisees Find Funding

Are you a current or aspiring franchisee in need of funding? Don’t do it alone. At Guidant, we specialize in matching your funding to your goals and objectives and the life cycle of your business. We can guide you through the complicated process of SBA loans, ROBS, and other funding options — including bank loans, term loans, and more. To facilitate your journey, we can also connect you with franchisors, franchise consultants, real estate developers, and SBA lenders.

Call us today at 425-289-3200 for a free, no-pressure business consultation to get started — or pre-qualify in minutes for business financing now!

“I knew that I needed a funding partner that would be a reflection of the community we are trying to serve — and that is really where Guidant shines.”

— Daniella Cornue, Le Village Cowork

Read the stories of REAL small business owners who work with Guidant.