During these tough economic times, securing finance for small businesses is becoming increasingly difficult. It is emerging however, that securing credit insurance coverage could prove more difficult that financing. Financial institutions have stated that they will be increasing their premiums to customers by up to 40% and that coverage of more risky industries such as retail and construction will be decreased.
In an article by The Sunday Times, Shaun Purrington from Atradius was quoted as saying “It is fair to say that compared with six months or one year ago small businesses will find it more difficult to get credit insurance. I’m afraid that the appetite of credit insurers to write new policies has declined.”
So what can you do? Well investing in a franchise means that your investment will not be perceived as risky as “going it alone”. In general, franchise businesses enjoy a higher success rate than independent business start ups and underwriters and lending specialists are aware of this. The 2008 NatWest/bfa survey found that “the number of franchise networks had grown year on year for the last 15 years and in 2007 saw its economic contribution grow at nearly five times that of the national GDP growth (15% economic growth in franchising against a 3.1 % GDP growth).” Also, many franchisors have developed relationships with financial institutions which can help individuals secure financing when investing in a franchise opportunity.
If you are considering starting your own business, then franchising is the way to go as it is proving to be the more secure option and while this recession continues – it may be one of the best ways of securing financing and insurance coverage.