YOU’RE LOOKING FOR FRANCHISING FINANCE!
LET THE CANADA SMALL BUSINESS FINANCING PROGRAM FUND YOUR FRANCHISE PURCHASE
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
The Canada small business financing program, properly approached, is a great vehicle to complete the financing of a franchise in Canada. Knowing the limitations of the program, and how to accentuate the benefits become a classic win/win. It's as close to a proven ' formula ' as we can get, so let's dig in.
ARE YOU CONCERNED ABOUT THE ABILITY TO FINANCE A FRANCHISE?
While franchising is as close to ' rampant ' as we can get these days many franchisees still view the whole purchase/acquisition and of course financing with some fear and trepidation. It's essentially fear of the unknown we suppose.
THE CANADA SMALL BUSINESS LOAN IS USED TO FINANCE A FRANCHISE BUSINESS OFTEN
While not specifically designed for the franchise industry the federal government Canada small business financing program over the years has evolved into a major lender in Canadian franchising. The program commonly called the govt SBL (small business loan) loan is government underwritten and sponsored, but administered and managed via our Canadian chartered banks as the financial institutions ' in charge ' of the program and a very small number of misc other financial institutions such as some credit unions. Although there is a nominal registration fee the overall interest rate and payment flexibility of this business loan is very attractive to borrowers.
DO BANKS FINANCE A FRANCHISE - YOU'LL BE SURPRISED!
It's not hard to see why banks flaunt their interest and expertise in franchise financing - as their loans are in a large portion guaranteed by the government. Who wouldn’t want a piece of that action?! While some franchising loans might be made by banks to the largest and well-known brands (think ' clown and a golden arch) outside the SBL program they are clearly not the majority.
WHAT ARE THE QUALIFICATIONS FOR A GOVERNMENT OF CANADA GUARANTEED LOAN?
While the requisites for the program are certainly not onerous it is often what the program does not do that limits some franchisees from reaching financing success for their venture.
And those prerequisites? They include:
Reasonably clean personal credit and financial history of owner - interest rates are very attractive to qualified borrowers
Proof of acceptance from their chosen franchisor
Premises lease co-terminus with loan amortization
Business plan/cash flow and management bio - 7 Park Avenue Financial business plans meet and exceed the requirements of banks and other commercial lenders.
Surely everyone recognizes that that type of information is standard within any type of business financing in Canada. Borrowers should also note that the loan is only available to businesses with under 10 million in sales revenue.
So where do things go awry? As we said it's knowing when the program will not work for you.
HERE ARE SOME LIMITATIONS AND DISADVANTAGES OF THE GOVERNMENT LOAN
Here's where the limitations of the program need to be clearly understood. They are as follows:
- The program is not 100% financing - the owner must have a reasonable down payment, aka ' equity component’
- The SBL loan is a term loan, not a cash loan, and not a revolving line of credit type facility - It is a term loan with equal fixed monthly payments, typically spread over a 3-7 year term that suits the borrowers
- The loan only finances new or used equipment and leasehold improvement - That means franchise fees, working capital needs are not part of the program funding
- The SBL does not finance inventories, and it doesn't provide financing for the actual sign up franchise fees
- The Loan cap is $1,000,000.00 so franchises requiring financing additional to that often become problematic when it comes to the SBL although at 7 Park Avenue Financial our experience is that a typical size transaction is 350k or less.
CONCLUSION
If your franchise needs can’t be financed by a direct franchise commercial lender explore the Canada small business financing program with us at 7 Park Avenue Financial. But beware, as we have noted, of what the program can... and can't do.
For further clarity and probably faster approval seek out and speak to a trusted credible and experienced Canadian business financing advisor with a track record of success in the franchise area of the Canada small business financing program.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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