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How to Finance a Kid to Kid Children’s Resale Clothing Business

Loan application process for a children’s resale store is easier than you think

If you dream of owning an upscale, successful children’s resale business, but aren’t sure how to get financing, Kid to Kid’s in-house financial adviser will help you find and secure a loan that best fits your needs. Depending on your circumstances, you have several options for financing your Kid to Kid children’s resale clothing franchise store, whether it’s a Small Business Association (SBA) loan, a traditional bank loan or even leveraging your retirement savings to invest in a business instead of the volatile stock market.

A leading resale brand with close to 100 locations nationwide, Kid to Kid wants to ensure our franchisees’ success, beginning with helping you finance your store. We understand that financing can be a stressful process and our in-house financial adviser will help guide you as you write a business plan and fill out applications. Being part of a franchise family means having a strong ongoing support system and our financial adviser will not only help you secure financing, but will help you set financial goals once you’ve opened your store.

“Our franchise owners enjoy average gross margins of around 65%, which is unheard of in the retail space,” says Scott Sloan, CEO of Kid to Kid. “We’ve worked hard to develop a model that is profitable and scalable.  Since most of our franchisees have never worked in retail, let alone resale, our world-class platform supports every aspect of their business, starting from day one.  When our franchisees are successful, we’re successful.”

If Kid to Kid sounds like a good fit for you, read on for an overview of the available financing options.resale children's clothing franchise Kid to Kid franchise image of shoes on display

Financing a Kid to Kid Resale Clothing Business is Easier Than You Think

Now that you’ve made the decision to bring a Kid to Kid resale clothing store to families in your community, there are several financing options. First things first, you need to determine if you meet the financial qualifications, which is the case for any type of franchise. Start-up costs for opening a Kid to Kid resale clothing franchise range between $300,825 and $488,825. Typically, a bank would expect you to have 10-20% of the total project cost in capital.

In order to secure a loan you’ll need a healthy credit score(most lenders require a minimum credit score of 640, but the higher the better.) 

Now let’s outline the various finance options available to you:


SBA loans from the U.S. Small Business Administration are probably the most common financing option for new franchisees. About 10 percent of all SBA loans go to franchisees, with the average size loan size around $250,000. Because Kid to Kid is SBA registered, SBA lenders with whom we have relationships can fast-track your loan, helping you open your doors as quickly as possible. This is a great option, as SBA financing can cover up to 90% of your initial investment in a Kid to Kid franchise. We will help you determine if you are eligible and qualify for this option based on capital, credit score and collateral.

These government-backed loans typically have competitive terms and interest rates. You will need several items when you apply, including a business plan, funding amount, credit history, financial projects and possibly collateral, such as your home, car or other property.

Traditional Bank Loan

SBA loans are in high demand so it’s wise to research additional financing options, such as a traditional business loan or line of credit from a traditional bank is another option for financing your resale clothing business. Much like the SBA loan, you will still need good credit, a down payment and collateral to apply for a traditional bank loan. As far as traditional bank loans, at Kid to Kid we have taken the stress out of the search process thanks to our relationships with major banks. 

401K Rollover

If you’re not risk-averse, you might consider using money you’ve set aside for retirement to finance your new franchise. The IRS’s Rollover as Business Startup option allows you to withdraw money from your 401K to fund a business venture without facing penalties or taxes. A 401K rollover could be a risky option, however, unless you have a substantial amount set aside in your retirement account.

Home Equity

If you own our home and it has appreciated in value, then a home equity line of credit (HELOC) is a type of second mortgage on your home you can take out in order to secure the funds needed to invest in a franchise. Much like a credit card, a HELOC has a revolving balance. Because a HELOC works most effectively during a time of stable interest rates and rising home values, it’s best utilized during a strong economy.

Loan from a friend or family member

Lastly, borrowing from friends or family is commonly used by franchisees to finance their business. Although friends and family may not want to receive interest on the loans, it’s important for franchisees to pay interest on the amount they borrow. Otherwise, the IRS might consider the money a taxable gift. A simple contract should be drafted and notarized to outline the loan terms. This will eliminate any potential disagreements. 

The resale clothing industry is expected to be a $64 billion industry by 2024 so once you’ve qualified for financing and are up and running the market demand for your resale clothing store is definitely there. Sales for high-end consignment clothing are on the rise as more people, particularly millennials, want to save money and forego fast fashion for eco-friendly thrifting. Fortune reports that “the fashion resale market is exploding, growing 21 times faster than the retail market over the past three years, according to research from retail analytics firm GlobalData.”1

Ready to start your new career as a Kid to Kid children’s resale clothing franchise owner?

For in-depth details about the Kid to Kid children’s resale clothing franchise opportunity, download our Free Franchise Opportunity Report. You also can learn more by visiting our research pages.