Online Financing Comes of Age for Franchising

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Online Financing Comes of Age for Franchising

Winning and locating financing online has arrived for the franchise industry. Prospective franchisees can deliver their loan application via the Internet to many different lenders and select the best package without ever leaving their desks. One Irvine, California-based software manufacturer, Oinke, LLC, is helping to make it happen with its FARMS (Financial Application Relationship Management System).
Oinke (named by the founder’s five-year old son for putting time and money in your piggy bank) virtually eliminates the paper, copying, faxing, and overnight mailings usually needed for processing a loan. These efficiencies help to reduce the cost of the lending process by an estimated 40 percent and cut the time it takes to fund a loan by 60 percent, says Thomas Markel, Oinke’s CEO and founder.
“We are committed to making borrowing faster, easier and cost effective for borrowers and lenders alike,” he says. Keep in mind that Oinke is not a lender or a broker, but commercial financing software attached to a nationwide lender network used by both lenders and borrowers.
Growing businesses such as those in the franchise industry are constantly looking for funding. With FARMS, the business loan and plan only has to be prepared once. It is then placed in a secure digital vault and can be used again and accessed anytime.
A sister company Credentrust, Inc., fully automates the processing of franchise applications, credit applications, and tenant lease applications. Its software includes automated credit bureau reports and bank and trade reference reports. Once data is captured from the franchise application, it populates loan applications and can be viewed by over 200 lenders for business loans, equipment leasing and commercial real estate loans ranging from $500 to $500 million.
Not any lender can be a part of the program. Oinke has a stringent process in place to review and approve lenders, and it only selects licenses lenders with proven performance records in its various loan categories.
In the franchise arena, Oinke recently announced that it is partnering with CKE Restaurants’ wholly owned subsidiaries’ Carl Karcher Enterprises, Inc and Hardee’s Food Systems, to provide FARMS to their new and existing franchisees. CKE are the owners and franchisors of Carl’s Jr. and Hardee’s restaurants.
When prospective franchisees visit www.ckr.com/franchise to investigate a Carl’s Jr. or Hardee’s franchise, they find a link to Oinke’s web site. They can then use the resources of Oinke to find the right lender for their particular needs.
Prospective franchisees simply fill out one form and upload all other necessary documents into their secure private vault. The borrower has access to this digital vault 24 hours a day 7 days a week. As a result, they can get proposals from multiple lenders for all types of loans. “It’s really a timesaver and allows them (prospective franchisees) more time to focus on their efforts to secure a franchise territory,” says Craig Hopkins, vice president of franchise sales for Carl’s Jr. and Hardee’s.
Only lenders approved by Oinke who have specified an interest in the borrower’s loan type are able to view the information in a borrower’s vault. In addition, lenders are not permitted to see the contact information of the borrower
This financing service, says Hopkins, “gives franchisees access to over 150 lenders at one time by completing just one loan application. As a result, it makes things happen faster for them.” While Carl’s Jr. and Hardee’s don’t provide financing for prospective franchisees, the Oinke’s collaborative financing tool provides those interested in franchise opportunities with a much-needed service.


Software Does the Work

Using FARMS, qualified parties chosen by the borrower can look into the vault to submit questions and proposals. Keep in mind that the identify of the borrower is hidden. When the borrower chooses the successful lender, only then does the lender receive the borrower’s contact information.
Oinke’s software organizes the loan request information to make it easy for a lender to offer a proposal on a commercial loan. All lenders have the ability to see a question and the answer in a borrower’s vault. This helps speed up the loan proposal process because the borrower doesn’t have to answer the same question multiple times.
In addition, Oinke’s software sorts, manages and runs live interactive transactions specifically designed for commercial business loans. It matches the lenders and borrowers loan type, size, and location and notifies the right institutions electronically.
Lenders can view at their desktop an anonymous loan package and those who are interested can submit proposals on the loan package. The borrower takes a look at the various proposals and then makes a decision on which lender to use.
Oinke also has partnerships with other franchise companies such as Hilton Hotels, Blimpies, Lady of America and Card Smart. In addition to its collaborative finance tool, Oinke’s software allows prospective franchisees to complete the franchise application online as well. Both Lady of America and Card Smart “are using the whole front end of the system for processing the franchise application,” says Markel.
In 2000, Oinke also set up a partnership with Country Inns & Suites By Carlson, an international mid-tier lodging chain with over 235 locations worldwide to offer commercial financing to potential franchisees via the Internet at www.countryins.com
Potential franchisees can access Country Inns & Suites’ online financing center anytime, allowing them to apply for commercial real estate loans, business loans and equipment financing from the Internet. Lenders whose criteria match those of the loan request bid on the franchisee’s financing needs. Oinke’s auction technology drives this bidding process.
Prospective franchisees will find that the web site offers a number of different types of applications that can be conveniently completed online. The whole process is competitive, says Markel, because lenders can view bids from other lenders. As a result, they are likely to submit more competitive bids to obtain a franchisee’s loan. Borrowers have said they like the online service because it helps reverse the normal auction process by placing the franchisee in control, instead of the lender.
Franchisees that need to borrow money are not committed to obtaining a loan until the moment they choose the winning proposal. To close on a loan, the lender and borrower arrange closing procedures directly, without Oinke’s involvement. That is why Oinke does not track how many loans its software has actually helped to finalize.
Even so the company has processed an estimated $3.4 billion in loan applications since it began offering its online service over three years ago. Prospective franchisees using Oinke’s software pay a licensing fee, which ranges from $29.95 to $499.95. There is also a user fee ranging from $100 to $2,000, which franchisees pay to view the various loan proposals offered by lenders.
As a franchisor, you may also want to look into setting up an online financing center for prospective franchisees. For more, contact CEO Markel at 949 743 1839.