YOU’RE LOOKING FOR A FRANCHISE LOAN!
BUSINESS LOAN FRANCHISE FINANCING IN CANADA
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
Oakville, Ontario
L6J 7J8
When it comes to how to finance a franchise in Canada the ability of the franchisee to complete that process successfully allows him or her to enter an industry that for all intents and purposes is... booming! We suppose we can even call it the ' Golden Age ' as a huge portion of today’s economy is in fact derived from the franchise industry itself. Let's dig in.
TWO BASIC TYPES OF FRANCHISE LOAN
Only two types of financing best address franchising loans. It boils down to either a specialty firm that funds this type of venture or a Canadian chartered bank that participates in, again, ' specialized' financing such as Canada's CSBF program - which is often perfectly suited to complete the financing required in assets such as equipment and leasehold improvements. This is a government-guaranteed loan that comes with an attractive interest rate and flexible terms.
BUYING AN EXISTING FRANCHISE VERSUS A NEW FRANCHISE
What is the best franchise to buy? We get that one a lot at 7 Park Avenue Financial when we meet clients doing their due diligence around buying a franchise in Canada.
We'll leave it to our clients in identifying the best franchises in Canada, but when it comes to a decision to buy a franchise we should mention also that it is very possible to finance a franchise purchase for an existing franchise versus a new franchise, with the two caveats being that of course, the franchisee will want to determine the true motives for the existing franchisee wanting to sell the business; as well as obtaining the required permission and approval from the franchisor franchise agreement conditions.
Both types of franchises will place pressure on working capital business needs. Whether it's new or used a financing option is always available but might vary greatly based on size and type of transaction.
Franchisor financing typically is not available - franchisors sell franchises, they don't finance them!
Again in both of the above cases, specialty franchise finance and bank financing are potentially available to complete the transaction.
A SOLID LOAN APPLICATION PACKAGE IS REQUIRED FOR FINANCE FOR A FRANCHISE
As with any time of business financing in Canada, a solid loan package must be evident for all ban loans and franchising loans for a franchise business to be approved based on your requirements.
The typical loan package should not seem like a daunting process - it’s essential info about yourself, your business, and your prospects. A proper loan package helps to guarantee the best interest rates and should be geared towards the type of loan you are applying for.
Included in that ' loan package’ will typically be the following:
Personal financial data - i.e. net worth, credit history, personal credit score
Business Plan - 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders
Cash Flow
List of items to be financed - (this should be broken down into several categories, including items to be financed by the owner, assets, leaseholds, franchise fees, etc - These are your franchise costs that need to be addressed by franchisees.
Note also that careful attention to the business plan and cash flow should be paid to the repayment of the loan, future financing needs, and the amount of owner capital being put into the business.
WHAT TYPE OF FRANCHISE ARE YOU BUYING - WHO IS THE FRANCHISOR?
We often are asked by clients if the reputation or size of the franchise is a key factor in financing approval. On balance we can say that is not necessarily the case and certainly if your franchisor has an existing portfolio of corporate or franchisee locations that are successful size clearly ' doesn't' count!
SERVICE BASED FRANCHISES VERSUS ASSET HEAVY FRANCHISES
One technical point is that ' service ' franchises are very difficult to finance since they have little need for hard assets, leaseholds and are often cash-based businesses. A good example might be a Home Inspection franchise.
LET 7 PARK AVENUE FINANCIAL CUSTOMIZE YOUR FRANCHISE LOAN
Franchising loans should be tailored to individual needs, as that relates to terms of the financing, rates, repayment, external collateral, etc. When it comes to external collateral, unless you are financing the venture predominantly on your own both a specialty franchise firm, or a CSBF loan will typically require no external personal collateral - i.e. mortgages on your home, security deposits, etc. Real estate can also be funded under the program, although this is rarely used in our experience here at 7 Park Avenue Financial.
CONCLUSION
Franchising in Canada is experiencing tremendous success. Prospective Franchisees considering this entrepreneurship option should seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist them in how to finance a franchise properly to ensure maximum chances of growth and profit success via financing solutions that work for your needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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