What are options for franchise financing in Canada?

How To Finance A Franchise - Canadian Franching Loans

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FUNDING YOUR FRANCHISE PURCHASE

Canadian entrepreneurs & potential business owners continue to explore franchise acquisitions in Canada to maximize the business opportunities provided by the franchise industry.

WHY BUY A FRANCHISE?

Entrepreneurs evaluate franchising because it provides them with an ability to generate sales and profits from established business models – they can build equity in businesses and enjoy the benefits (perceived or otherwise!) of self-employment and the entrepreneurial dream. But how to finance a franchise can become a challenge if you do not have the right information around bank loans or other funding options at an acceptable interest rate based on overall credit quality.

THE FRANCHISE BUSINESS LOAN

As you start to formulate your ideas around purchasing a franchise, the concept of how o you will finance your new business should be very close to the top of your list. Many clients we talk about view the actual financing of the franchise as the largest obstacle to achieving self-employment success.

The reality is that anyone with a reasonable business and work background, coupled with a stable financial situation (good credit bureau history, etc.), should be able to finance their venture successfully.

THE KEY TO SUCCESSFUL FRANCHISE LOAN SUCCESS?

Is there a secret to franchise financing in Canada! Yes, there is, and don’t be surprised by the answer, which is simply that you must have a thorough and solid proposal in hand, and the right people need to see that proposal. Unfortunately, that isn’t as easy as it seems when you are searching for franchise loans.

HOW ARE FRANCHISES FINANCED?

So how are franchises in Canada actually financed? During the last couple of years, due to the worldwide economic slowdown/recession, franchise financing became a smaller fishbowl, so to speak. In some cases, the methods in which franchises were financing actually disappeared, and in most cases had the ground rules changed relative to what's required and how it works and how long it takes.

THE CANADA SMALL BUSINESS FINANCING PROGRAM

In Canada, franchises are financed by, in most cases, a government-sponsored and subsidized loan that comes under a program known as the CSBF loan program. These loans are the equivalent of U.S. SBA loans.

Additionally, a very select number of firms offer specialized franchise financing loans. In our experiences, we have complimented these two programs with basic lease financing of assets plus, in most cases, a working capital cash flow loan or an introductory line of credit to facilitate daily operations and long-term growth. Interest rates are excellent under the program, and payment terms are flexible and tailored to your cash flow.

Let the 7 Park Avenue Financial team walk you through the application process and be with you every step of the way.

A good credit score, personal credit history, and reasonable net worth are key factors in financing approval.

So is there the key to success in franchise finance and small business loans that make sense for your acquisition of a new franchise or an existing one as a franchise owner in Canada? Absolutely, and it starts with a solid executive summary and business plan that has some reasonable financial projections and assumptions attached to it.

That is one critical key to understanding franchise loan requirements. The basic elements of that document are the business description, an overview of the basic business model and industry, financial projections, and a focus on your business's strengths and its expectations of profits. Those profits will, of course, be cash flow to repay your franchise loan and debt.

CONCLUSION

Buying a franchise requires solid, up-to-date information on financing options. We recommend that all clients consider an entrepreneurial career as a franchisee in Canada discuss your franchise financing options in small business with a credible and experienced advisor in franchise financing, sometimes known as a franchise loan broker.

Keep your financing objectives at the very top of your list early on in your process, plan well, and present your proposal once and properly. Speak to 7 Park Avenue Financial, and you will soon be en route to a successful new business with sales and profit growth!

FAQ:FREQUENTLY ASKED QUESTIONS

Government loans are a popular choice for ambitious franchisees. If you have good credit and a reasonable deposit, this is the best option to get your business running quickly with A lower risk of failure or bankruptcy.

Finding a lender who will fund your franchise is an extensive and demanding task. Your timeline risk tolerance and credit history determine the best plan of action for you. Government loans are increasingly popular among ambitious entrepreneurs with good credit scores as well as reasonable deposits or assets and who can demonstrate business experience.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

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