How Do I Finance the Business?
Explore the many ways to fund a Gigi’s Cupcakes franchise business
Opening a typical Gigi’s Cupcakes requires approximately $300,000, including the franchise fee of $35,000. We require franchise owner candidates to have $100,000 in liquid assets and a $250,000 net worth.
Once these criteria are met, most franchisees make a 20% down payment and finance the remaining 80%.
Gigi’s Cupcakes franchise system members have financed their businesses in multiple ways. As you research opening a Gigi’s Cupcakes franchise business, explore all the options to see what will work best for your situation.
Options for financing a Gigi’s Cupcakes franchise business
1. Community banks
You may wish to begin at your local bank to see what loans you may qualify for. Many community banks, which are generally defined as having less than $10 billion in assets, offer loans to small businesses.
A loan from your community bank will generally cover a broad range of financing needs, including remodeling, relocating, equipment, furniture and fixtures.
Your loan officer will require certain paperwork and documentation, such as tax returns, a business plan and a cash flow projection.
2. Retirement funds
A 401(k) or an individual retirement account (IRA) can be converted into a self-directed IRA to fund your business. Once you set up a self-directed IRA, you can withdraw retirement funds without paying penalties. There’s no long loan-approval process, and you can put your business’ profits back into your retirement account. This option also allows you to keep cash available in your bank accounts for starting and growing your business.
3. Small business loan (SBA)
As the economy has improved, U.S. Small Business Association (SBA) lending has made a strong comeback. SBA loans are government-backed loans at low market rates, which eliminates most of the risk for banks.
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.
Gigi’s Cupcakes is in the SBA registry. Loan applications for franchises on the Franchise Registry can be reviewed and processed faster and more efficiently by the SBA and its lenders because the respective franchise agreements do not need to be reviewed in each individual franchisee situation.
We have an established relationship with a lender with whom many of our franchisees have worked in the SBA approval process.
You may choose to partner with a friend, family member, investor or silent partner to meet the required amounts for down payments, liquidity and assets.
5. Home-equity loans
If you own your home, you may qualify for a home equity line of credit (HELOC) or a home equity installment loan (HEIL), which you can use to finance your business. Because banks will generally require evidence that you can repay the loan using existing sources of income — your projected income in business will not be considered — this loan may be a good option for couples in which one spouse plans to keep their current job while the other spouse is dedicated to starting and working the business. These loans usually have a low interest rate and are highly flexible.
Gigi’s Cupcakes will help you discover your best options for financing
We are looking for passionate, business-minded people who want to join with us to bring the joy of Gigi’s Cupcakes to their area. We will do all we can to help you discover the best way to finance your Gigi’s Cupcakes franchise business and make your dreams come true. Complete the Request Franchise Information form below, and one of our team members will follow up with you.