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Financial Preparation & Funding
Get your financial house in order before evaluating any opportunity.
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Credit & financial profile
Pulled all three credit reports (Equifax, Experian, TransUnion)
Disputed any errors on credit reports and resolved outstanding items
Credit score is at or above 680 (700+ preferred for SBA financing)
No bankruptcies, foreclosures, or major derogatory events in the last 7 years
Debt-to-income ratio is below 43%
All tax returns are filed and current for the last 3 years
Personal financial statement is prepared and up to date
Bank statements from the last 90 days are organized and available
Liquid capital assessment
Total cash and savings accounts documented
Taxable investment/brokerage accounts documented
Home equity available (HELOC or loan potential)
Retirement accounts documented (401k, IRA, 403b)
Cash value life insurance (if applicable) documented
Other liquid assets identified and documented
Total liquid capital calculated
Minimum working capital reserve set aside — DO NOT deploy this amount
SBA loan preparation
Researched SBA 7(a) loan program requirements and eligibility
Identified SBA Preferred Lender Program (PLP) lenders in my area
Confirmed target franchise brand is on the SBA Franchise Registry
Prepared personal financial statement for lender submission
Gathered 3 years of personal tax returns
Gathered 3 years of business tax returns (if applicable)
Prepared resume highlighting management and relevant business experience
Understand that SBA requires 10–20% equity injection from my own funds
Understand SBA guarantee fees and how they affect total loan cost
Spoken with at least 2–3 SBA franchise lenders for pre-qualification
ROBS — 401(k) rollover preparation (if applicable)
Confirmed retirement account balance qualifies (minimum $35,000 recommended)
Confirmed account type is eligible (401k, IRA, 403b, TSP, SEP-IRA)
Researched reputable ROBS providers (Guidant Financial, Benetrends, FranFund)
Understand that ROBS requires a C-Corporation structure
Understand ongoing compliance requirements (Form 5500, annual plan testing)
Understand the risk — retirement funds will be at risk if business fails
Received quotes from at least 2 ROBS providers and compared
Consulted with a CPA about tax implications and ROBS structure
Home equity financing (if applicable)
Confirmed current home value with recent appraisal or market estimate
Calculated available equity (home value x 85% minus outstanding mortgage balance)
Contacted lender about HELOC or home equity loan options and current rates
Understand variable rate risk on HELOC products
Understand that home is at risk if business fails and loan cannot be repaid
Funding stack planning
Identified primary funding source and amount
Identified secondary funding source and amount
Total funding capacity calculated
Investment range defined based on funding capacity
Working capital reserve confirmed as separate from investment funds
Contingency reserve (10–15% of investment) identified for cost overruns
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