With banks still stingy, Cafe2U has helped franchisees find alternative routes to get money to start a business
The economy is finally recovering, but a lot of banks haven’t gotten the memo. Business lending is still tight, and while there are some signs that the lending environment is starting to thaw (Bank of America, for instance, recently announced that its small business lending increased 28 percent in 2012), a lot of entrepreneurs are tapping nontraditional sources of startup funds to get their businesses off the ground.
Cafe2U’s newest franchisees, for instance, tapped their retirement accounts in order to fund their coffee franchise, which will open in Columbus, Ohio, in April. Norman Amstutz and David Bowman took advantage of a financing maneuver that a lot of people don’t know is available: Essentially, they set up a corporation with a special type of retirement account, rolled their existing retirement funds into the corporation’s, then invested the corporation’s holdings into a Cafe2U business. It’s a process that, if handled properly by expert advisors, avoids the hefty early withdrawal fees that typically discourage people from reaching into their IRA or 401(k) savings.
Cafe2U expanded into the United States in 2012 and already has five franchisees in operation here, part of a worldwide fleet of 203. Our unique coffee food truck concept squeezes a full barista setup and café menu into a van that is able to reach out-of-the-way workplaces where employees don’t normally have access to excellent coffee. We’re like an ice cream truck for adults.
While Cafe2U is new to the U.S., it is already part of the U.S. Small Business Administration’s Franchise Registry. The SBA created the Franchise Registry in 1998 to make it easier for banks to determine franchisees’ eligibility for SBA loans. When the agency approves a franchise system for inclusion, it agrees to guarantee 75 to 85 percent of any loan to franchise candidates, reducing the risk to banks and increasing the likelihood of approval.
Before approving franchisors for inclusion, the agency must sign off on their disclosure documents to ensure they meet SBA standards for size and franchise owner independence.
You can read a lot more about us, including interviews with franchisees on our blog and research pages. If you’re interested in starting a business and like our unique mobile espresso van concept, get in touch with us by making an information request or giving us a call at 855-522-3323, and we can discuss the company as well as financing options. We look forward to speaking with you!