Performance Capital Franchise Finance Programs


Q. What can I finance through the PCC franchise program?
A. PCC has several lease/loan programs to help you achieve your business objectives. Some of them are listed below:

  • Up to 80% of start-up costs including franchise fees, leasehold improvements, equipment, and inventory costs (excludes working capital)
  • Up to 90% of franchise acquisition costs
  • 100% of re-imaging costs for existing franchisees (location in business at least 1 year)
  • 100% of expansion costs for existing franchisees (location in business at least 1 year)
  • 100% of equipment costs for start-up or existing franchsiees
  • Q. What dollar amount can I finance through PCC?
    A. The PCC program is designed for requests of up to $250,000.00 in exposure. For example if your total cost is $300,000.00 and you are putting $50,000.00 down then your exposure would be $250,000.00

    Q. Are the rates for a start-up substantially higher than for an existing franchise business?
    A. No. Most of the financing that PCC approves is for "brand name" franchise concepts. In our experience the "brand name" franchise concepts actually perform as well or better than many established businesses that do not have the benefit of a "brand name".

    Q. How long a term can I get for franchise financing?
    A. PCC will extend terms of 24-84 months for qualified franchisees

    Q. How will I handle deposits and advances to my equipment suppliers and contractors?
    A. If you require assistance you may elect to use our "Pre-Fund" program. PCC will advance required deposits to your suppliers and contractors so that your location can be opened on time and on budget. In order to institute this program you must agree to sign your lease/loan and begin making payments. Your PCC representative can provide you with more details.

    Q. How do I know if the franchise concept I've chosen qualifies for the PCC franchise program?
    A. PCC has approved and financed many franchise concepts. Among them are Subway, Blimpies, Mail Box, etc., Maggie Moo, Rita's Italian Ice, Baskin Robbins, Dunkin Donuts, HoneyDew Donuts, Signs Now, Cousins Subs, AAMCO Transmissions, and many more. If you do not see your concept listed PCC may have reviewed the UFOC (uniform offering circular) and approved the concept or you can submit the UFOC and request a review of the concept.

    Q. What if PCC does not approve the franchise concept I've selected? How can I obtain financing?
    A. PCC carefully reviews a UFOC before extending an approval on franchise financing. If the concept you are interested in is not approved then PCC could approve your financing with the condition that you select an approved franchise concept or find a similar concept that will pass the scrutiny of our underwriters.

    Q. Why does the franchise concept I select matter so much to PCC?
    A. In our experience the underlying strength of the franchise concept is of paramount importance. PCC places tremendous emphasis on the ability of the Franchiser to deliver those services that are promised to you in the UFOC. We look at the financial strength of the franchiser, the failure and "turnover" rates of their locations, litigation, and background of the primary officers and managers. We consider industry trends and the strength of the franchise "brand" either regionally or nationally. We want you to be successful because successful franchisees repay their leases and loans. Our stringent review of each UFOC allows PCC to offer excellent rates without additional collateral such as a second mortgage.

    Q. How do I find out if I'm qualified?
    A. To determine your qualification you can call PCC at 1-866-334-5556 or you can send us a fax to 1-866-334-5557. Once your application is screened through our automated processing program, a PCC representative will contact you to obtain any additional information that will be needed to expediently process your request.

    Q. I've heard that leasing is more expensive than borrowing. Is this true?
    A. There are costs attached to any type of financing. Depending on the structure of your transaction you may actually pay less than you would with a loan. There many other factors to consider, however. For example, How is the loan to be secured? How much of down payment is required? What kind of closing fees will you be required to pay? How long a term will the lender give you? Do you have any "opportunity costs" on money that is required for down payment? Will the lender structure the loan so that it matched the anticipated cash flow from your business? These are all important questions that must be answered before you make a final decision. Always remember that the best way to finance an acquisition of a business or equipment is usually the way that affords you the most advantageous re-payment structure. The most advantageous structure may not always be the best rate.

    Q. I've heard the term "opportunity cost" before. Can you explain the concept to me?
    A. The concept of "opportunity cost" is relatively simple. Usually a down payment or any other monies that you contribute to your business or equipment acquisition is designated as equity. If you contribute more equity to a transaction the lender or lessor has less "exposure" on the loan or lease. You may be more familiar with "exposure" if you think of it in terms of Real Estate where 'exposure" is more commonly called "Loan to Value". Many lenders look at a "loan to value" ratio of 75/25. 75% of the total price you pay is the amount the lender is exposed on the property. When you contribute equity to any type of finance transaction you lower the amount that the lender is "exposed". From an underwriting standpoint this is obviously seen as a positive factor. The downside is that there is a "cost" associated with the amount of equity you contribute. This cost is known as the "opportunity cost". You can calculate your opportunity cost on any transaction by looking at the cost of borrowing a higher amount (debt cost) vs. the "opportunity" to make a return on the contributed equity if you were to use it in your business to purchase, for example, inventory. If your cost of debt is 12% and your return on equity invested in business inventory is 17% then your "opportunity cost" is the difference you could have earned by investing in inventory instead of a down payment. In this case it is more advantageous to borrow a higher amount and conserve your capital for other uses that earn you a better return. This concept is one of the most important when making a leasing vs. borrowing vs. outright purchase decision.