You Are Looking for Business Financing For Your Franchise!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
Unaware / Dissatisfied with your financing options?
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Email - sprokop@7parkavenuefinancial.com
BUSINESS FINANCING FRANCHISE LENDERS / CANADA
We guess they call it ' crunch time. ' As far as you are concerned, your chances of success are excellent... now it's time to find the business financing you need for your franchise business ... from franchise lenders that provide the funds you need for that business loan.
WHERE IS THE MONEY COMING FROM? WHAT YOU NEED AND WANT TO KNOW
Let's ensure you've got the basics covered around small business loans, starting with the amount of funding you need and solutions for each part of that capital. We're also saying that you need to potentially cobble together a solution from several financing sources in many cases.
WHAT TYPE OF LOAN COVERS A FRANCHISE ACQUISITION?
It's somewhat rare that one franchise lending solution will cover all your financing needs simply because we're talking about different classes of assets. Understanding how much more money you need post-acquisition is key to long-term success.
THE OPTIMAL FINANCE STRUCTURE
So what makes up a franchise structure for small business owners contemplating being a franchisee in a franchisor network? Typically there are several components - the franchise fee itself, potentially inventory, and equipment and leaseholds involved in your franchise location.
ONGOING FUNDING NEEDS
Any business, whether it's a franchise or not, requires working capital for ongoing operations; and also remember that a key component of that working capital is the royalty fees that you pay back every month to the franchisor around your franchise agreement.
Typically royalty fee arrangements from popular franchises that we see all the time at 7 Park Avenue Financial are in the 8% range for most recognizable brand names, but that varies per size and type of franchise, of course.
New franchisees and existing repurchases can be financed in Canada for new franchisees, and other factors than just the royalty fee should always be reviewed.
ASSESSING YOUR PERSONAL COMMITMENT AND EXPERIENCE
To determine your strategy and chances of success, you have to spend some time checking one specific person out ...that’s YOU! So that should be easy to do. Your ability to position your personal finances and your background and experience plays a huge part in franchise approval for many franchisors.
Approval criteria will also vary greatly, though. Many franchises are often turnkey operations, but a strong business sense and experience always help.
One of the documents you'll need is a PNW statement - a statement of personal net worth. A simpler definition - what you have; what you owe! A good credit score & credit report is also important when financing via traditional financial institutions.
DON'T FORGET TO INVESTIGATE GOVERNMENT-GUARANTEED LOANS
The Canada Small Business Financing Loan Program is a solid way to fund your franchise purchase. Talk to 7 Park Avenue Financial on Government loans to finance the franchise. Another factor to know about ' SBL LOANS ' is that the government is not the direct lender for the program but is the sponsor and creator of this loan, used by thousands of Canadian entrepreneurs.
With respect to your personal credit history, your Personal Net Worth form is assessed as a key part of the credit approval decision. Remember that as successful or well-known as your franchisor might be... from a lender's perspective, you are still essentially a 'start-up.' If you're buying an existing franchise, we guess you could call it a re-start!
In Canada, similar to the U.S., your personal 'score' at the credit bureau has to be over a certain threshold. The entire system is run on a scoring system, with 800 being perfection at the credit bureau. So what’s a satisfactory score - we'll share with you that in Canada, the majority of lenders of all types of business and personal financing rely on a score in the 650 range.
And trust us... higher is better. This whole exercise also allows you to determine what amount of capital you can put into the business, as it's impossible to get 100% financing for all your franchise financing needs - typically, 10- 40% should come from yourself.
In assessing your overall financing situation, take into consideration that the lender will quite often be factoring in a ' worst-case scenario, one that assumes that perhaps your sales and profit and cash flow ( out of which you repay your franchise loan ) might not be as optimistic or real as you have positioned.
Our theme today is, of course ' doing it right the first time. ' That’s where your business plan or executive summary comes into play. It should be clear, and understandable, and position you and the industry in a positive light.
A business plan is essential for any business purchase, but it's essential if you want to get a loan. The more information and detail in your proposal, the better chance of winning approval from a bank or commercial lender. Asking someone such as the 7 Park Avenue Financial team who has done this before will help make sure everything makes sense and give you credibility.
We advise clients that a key goal here is realistic financial projections, and don’t forget to include repayment of franchise debt! We're often dismayed by how much none financially oriented clients spend for a business plan - a slick proper one should not cost you more than $1-2k, in our opinion.
Doing some careful preparation in the areas we have discussed will help you ensure both final financing approval and a shorter timeline than we see many clients suffer through.
CONCLUSION - FRANCHISE FINANCING OPTIONS
You will find that your success rate is much higher if you've got experience working with financing partners such as our firm, who already have experience in the business finance world.
We know what it takes to make things work and are familiar with successful enterprises to offer assistance.
Help is only a call away via a Canadian business financing advisor who has credibility, experience and can be trusted in a full suite of funding needs - including real estate financing in some cases - ensuring your final business financing approval and financial success on your franchise to satisfy certain requirements of franchisors.
FAQ: FREQUENTLY ASKED QUESTIONS
Do you need a business plan for a franchise purchase?
The idea of a complete business plan is to clearly detail how you intend on making your franchise business profitable which is essential when looking into getting financing from banks because they want assurance that there will be no loss in revenue or assets if the loan defaults.
Professionals can help with putting together applications, so all necessary information gets collected before submission.
