Can I Finance a Togo's Franchise? - Togo's Sandwich Franchise

Can I Finance a Togo’s Franchise?

Togo’s partners with Franchise America Finance to make financing simple

Togo’s restaurants are simple to finance. We are attractive to lenders thanks to our strong business model and a track record of success since 1971. We partner with Franchise America Finance, which has set aside a pool of funds specifically to help Togo’s franchisees get started and expand. It’s an arrangement that FAF offers to a select group of franchisors that pass its criteria, which examine franchise support, systems, operations standards and financials, and the arrangement means that franchisees who meet Togo’s criteria to join the business are a virtual lock for an SBA loan should they choose that route for financing their business.


There are several options for financing your business, in addition to an SBA loan. Here’s an overview of some of the most common financing methods for starting a business:

1. SBA loans

U.S. Small Business Association (SBA) loans are government-backed loans at low-market rates, which eliminates most of the risk for banks. Togo’s works with Franchise America Finance to simplify and speed the process for applying for SBA loans.

Advantages: You can finance a percentage of the cost of your business, which allows you to conserve cash; the interest rates tend to be fairly low; there is no prepayment penalty; and you can obtain better loan terms once you have a proven track record.

Things you should know: If you work with another lender, it often takes three months or more to obtain an SBA loan, and the income and asset documentation process can be exacting. The loan also requires 100 percent collateral. If most of your collateral comes from home equity, you may want to consider a home equity loan instead.

2. Leverage retirement funds tax-free and penalty-free

If you have a 401(k) or an individual retirement account (IRA), it can be converted into a self-directed IRA to fund your business. This financing option became extremely popular during the recession, when depressed real estate prices eliminated home equity loans as an option for many franchise buyers.

Advantages: Once you set up a self-directed IRA, you can tap into your retirement funds without paying penalties. Since it’s your money, not the bank’s, you don’t have to worry about a long loan-approval process. As your business succeeds, you make payments back into your retirement account without having to pay interest to a bank. This option also allows you to keep cash in your bank accounts to be available for starting and growing your business.

Things you should know: Your business becomes your retirement plan, which brings risks. You should be confident that you can beat the stock market by building the value of your business, as well as by avoiding interest payments on a loan.

3. Home equity loans

If you’ve owned a home for many years, there’s a good chance you can get a home equity line of credit (HELOC) or a home equity installment loan (HEIL) to finance your new business.

Advantages: They usually have a very low interest rate; they are highly flexible and sometimes have no specific repayment schedule; and they don’t require a lot of documentation, such as a formal business plan or an accounting of how the funds will be used. This provides more flexibility for your business.

Things you should know: You’ll need to show enough income to repay the loan through your existing sources of income — your projected earnings as a franchise owner won’t count when the lender calculates your ability to repay. It can be a great option for a couple in which one person plans to keep their fulltime job while the other spouse establishes the business. A real estate appraisal will be required to establish your home’s value.

4. Friends and family

DSCF2763-2You may have friends or relatives who are willing to invest in your success.

Advantages: They know you, they are typically flexible on repayment terms and they may have expertise that they can offer your business. They may not require collateral.

Things you should know: If the business doesn’t meet expectations, it may strain your relationships. Family and friends may also seek equity in exchange for your investment, which would create a partnership arrangement.

5. Partnerships

Partnerships can allow two or more people to combine their resources to purchase a business. If partners complement one another’s skill sets and add value to the business, it can be a great arrangement. If partners struggle to work together, it can be painful.

Advantages: You can split management and leadership duties, which gives you greater capacity and flexibility. Since you have multiple people to oversee operations and marketing, you may be able to grow faster.

Things you should know: Partners must have clear guidelines for who handles what and how profits are divided. In addition, to get the most out of your partnership and avoid disputes, clear communication and a shared commitment to the business are essential.


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