Start up your business with a minimum initial investment
The Lost Fund Loans for Franchising are an excellent solution to start up your business with a minimum initial investment. Rather than getting caught up in burdensome debts and long-term installment plans, many young entrepreneurs prefer to request a contribution from the European Union or other bodies specializing in providing funds for new companies, to reduce costs and, consequently, the risk margin. See supporttransit.org for a summary
The capitals obtained thanks to Loss-Funded Loans, in fact, can be used to buy property and machinery, obtain licenses or for one’s own professional training but, unlike ordinary bank loans, they should not be returned in full, but only in a small percentage burdened with much more advantageous and convenient interest rates and with an amortization plan to favor the economic development of the company.
The Loss Funds are mainly intended for young people who want to set up their own businesses and start a business in various sectors, from agriculture, to research, to tourism, up to commercial establishments: it is possible to take advantage of these funds, in fact, also to open a Franchising shop, in accordance with the law. In this article we will explain to you how the Fund Loans for the latter type of companies work, clarifying both who can access them and how to make the request.
- 1 Types of non-repayable loans for franchising
- 2 How much can you get?
- 3 What costs are covered?
- 4 Requirements for accessing the Financing
- 5 Who to contact?
- 6 Which documents should I present?
- 7 How to repay the loan?
- 8 Conclusions:
Types of non-repayable loans for Franchising
Lost Fund loans for the opening of a franchising business are managed and provided by Invibank, and include various types of contributions:
- totally lost grants, payable from year to year, aimed at covering all the expenses necessary for starting up the business;
- contributions aimed at covering up to 95% of initial and management costs;
- mixed contributions, consisting of a non-repayable percentage and another repayable through a facilitated installment plan, with lower interest rates than those on the market.
How much can you get?
The European Regulation, published in April 2012, establishes the limits for the provision of contributions aimed at the start-up and management of franchise activities: the State, Local Administrations and Specialized Bodies, in fact, can only finance companies according to the directives established by law, subject to authorization by the European Commission.
This does not apply to low-level grants, ie below the threshold defined as ‘de minimis’, for which it is not necessary to notify the Commission of the funding, nor wait for authorization: the sum payable, in these cases, it must not exceed 200,000 euros, paid in a single installment or in several phases, depending on the achievement of the intermediate objectives set in the initial agreement.
What costs are covered?
As we said, this category of financing can be used to cover all the expenses related to the start-up and development of the new franchising business. The capital obtained, therefore, can be channeled into various sectors, from the purchase of goods, equipment, materials and buildings, to the restructuring and securing of the building, to the connection of the electricity grid, up to the acquisition of professional skills ( eg courses, specializations) and licenses.
Furthermore, the Fund can be used for all those activities that fall within the field of research, innovation and new technologies: capital, in fact, can also be used for the purchase of patents, new generation materials or for the development of new products or services. Finally, expenses related to the management of the activity, for example the rental of the building, the payment of insurance or professional services, financial advice and utilities are allowed.
Requirements for accessing the Financing
In order to access the Non-Profit Funds for Franchising, it is necessary to possess certain requirements, established by the current regulations. So that the request can be made, therefore:
- the owner must be of age and unemployed;
- must have resided in Italy for at least six months;
- the legal and operational headquarters of the company must be in Italy;
- the nascent activity must be affiliated with Invibank;
- the company must be maintained for at least five years.
The list of franchisors, however, is constantly updated, so we suggest you keep an eye on the official website of Invibank, to find out about the new opportunities in real time.
Who to contact?
As we said, the Italian body in charge of managing and disbursing the Funds is Invibank. The request by the entitled parties must be addressed to the aforementioned company, which will assess the feasibility, based on the possible earnings, the budget, the business plan and the choice of the territory; alternatively, you can contact the chamber of commerce of your municipality of residence or obtain information on the calls available from the Local and Provincial Administrations.
We also suggest that you constantly keep an eye on the web, as most of the calls and projects, especially those based in Europe, are published online.
Finally, we remind you that a fundamental requisite for the success of the request is the presentation of an effective and detailed business plan, containing useful information on the evolution of the work and on the possible economic development of the company.
What documents should I present?
To initiate the request for a non-repayable grant for franchising activities, all documents must be presented aimed at certifying their compliance with the requirements imposed by the regulations, namely:
- personal documents;
- certificate attesting to the state of inaction;
- certificate attesting ownership of the company;
- business plan, including:
- analysis of the territory in which the activity is to be started;
- analysis of the necessary investments;
- study of the economic evolution of the project;
How to repay the loan?
Loan Funds offer young entrepreneurs the possibility of obtaining capital with much more advantageous conditions than ordinary bank loans. The main benefits are:
- only partially repay the sum obtained (the Lost Fund varies from 30 to 60%, and in some cases even to 95% of the total amount);
- amortization plan with a duration of 7 years;
- freezing of the installment plan for the first year of the activity;
- interest rate not exceeding 30% of that provided for bank loans;
Franchising loans are a valid incentive for the start of new commercial activities, aimed at favoring young entrepreneurs who do not have the necessary capital to cover all initial and management expenses. We advise you to visit the website of Invibank, as well as to keep an eye on the news offered by all the specialized bodies, to know in time the available tenders.