Exploring Your Commercial Finance Options
Investing in a petrol garage can be a highly lucrative business providing stable revenue streams, strong demand and regular customers. However, securing the necessary capital to cover the costs of acquiring and setting up a franchise presents some challenges. Commercial finance provides a practical solution for you to fund your petrol garage purchase.
Understanding the costs of petrol garage franchise finance
Before seeking finance, it’s vital you understand the costs associated with purchasing a petrol garage/petrol garage franchise:
Franchise fees: Initial costs required for you to acquire the rights to the franchise
Property purchase or lease: Securing a suitable location for your garage
Refurbishment and branding: Upgrading the premises to meet your franchise standards
Equipment or stock: Investing in fuel pumps, convenience store stock, and additional operational equipment
Working capital: Ensuring sufficient cash flow for your garage’s day-to-day expenses
Given the significant investment required, commercial finance presents an effective and affordable route to fund these costs.
Your commercial finance options to fund a petrol garage franchise:
Business loan
Traditional business loans from lenders provide you with a lump sum to cover the above costs. Business loans provide flexibility, meaning you can utilise this loan across a number of different areas to fund your petrol garage franchise purchase and associated operational costs. Business loans have structured repayment terms allowing you to spread the cost of funding the franchise purchase over time, with affordable monthly repayments.
Asset finance
Asset finance allows you to purchase essential equipment, such as fuel pumps and fittings for your retail operations. Asset finance options such as hire purchase or a business lease allows your business to spread the costs of acquiring this equipment over time while preserving cash flow.
Commercial mortgages
If you plan to purchase the property for your garage, a commercial mortgage can assist in funding the acquisition. Lenders typically require a deposit, however, commercial mortgages provide long-term cash flow stability and potential capital appreciation while allowing you to become the owner of the property.
Franchise finance packages
Some petrol garage franchisors work with lenders to provide tailored franchise finance packages, bespoke to your specific requirements and financial position. Franchise finance can provide flexible terms based on the franchise’s established business model and projected profitability.
Invoice finance
If your garage also features a convenience store or car workshop offering services on credit, invoice finance allows you to unlock cash tied up in unpaid invoices. Reduce the burden that late, and unpaid invoices present to your business and retain vital cash.
Merchant cash advance
Petrol garages often generate revenue through card payments. A merchant cash advance allows you to borrow money and pay back a percentage of your card sales back to the lender, meaning you have no monthly figure to commit to so you pay back incrementally, ensuring you can afford to pay back the loan.
Choosing the correct finance option for your specific requirements
The most suitable finance option depends on your unique financial and commercial position, as well as your desires for future growth of your petrol garage business. Commercial finance provides a variety of solutions tailored to support your investment. By exploring these options and working with a commercial finance broker to understand your unique requirements, you can successfully secure the capital needed to establish and grow your petrol garage franchise, tailored to suit your position.
If you want to speak with a broker who understands franchise financing, get in touch with Mill Wood.
