If you have good credit or past entrepreneurial experience, qualifying for significant franchise financing isn’t a problem. The question is how much of the total costs you should finance and how much you should cover with liquid capital from your savings account. What areas are the most vital to include in a franchise loan?

Should You Save or Spend Your Liquid Capital?

Most franchises require you to have a minimum amount of net worth and liquid capital. They often ask that you have enough cash to cover the franchise fee, hiring costs, marketing costs, initial inventory and other administrative needs. However, the fact that franchisors want to see that you’re able to cover these costs doesn’t mean you should use all of that capital during the franchise opening process.

In fact, many successful franchisees and financial experts recommend holding onto all of the liquid capital you can, at least at the beginning. If you can roll most of the capital needs of the pre-launch checklist into a low-interest franchise financing program, you should take advantage of it. Why?

Because working capital is worth its weight in gold for new franchise locations. There’s simply no way to predict everything that can pop up at the beginning. Remember that opening a new business isn’t just about opening your doors and starting to serve customers. First, you need to built a solid customer basis and get a good local reputation. This can take some time. In the meantime, you’ll be happy that you have your savings ready to deal with unexpected emergencies.

Should You Apply for a Single Loan or Multiple Franchise Financing Options?

There are many options for financing business needs. The best choice really depends on your desired franchise and management style. Unlike what many first-time franchisees think, there are actually quite a few franchises that qualify for small business loans, or SBA financing. These loans allow you to include many different needs in a single loan, including real estate, business equipment and working capital.

On the other hand, if you need a blend of loans and leases, you may want to talk to a financial professional about putting together a franchise financing package. This type of program can include low-interest loans for real estate, business lines of credit for ongoing costs, working-capital financing options, and equipment leasing for getting things such as payment systems and other equipment.

The bottom line is that financing is your friend. Try to use this tool as much and as wisely as possible.