YOU’RE LOOKING FOR A FRANCHISING LOAN SOLUTION!
SMALL BUSINESS LOAN FOR A FRANCHISE
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
Franchising opportunities in Canada require... you guessed it... a franchise business loan of some sorts. Easy to say, somewhat harder to finalize. Let's examine some key points and lessons we've shared with franchisees in their search for ' the big reveal' around achievable franchise finance business loans success. Both a new franchise and an existing franchise are viable purchase considerations. Investing in a franchise is a huge part of the Canadian economy success stories. Let's dig in.
WHAT TYPE OF FINANCING DO YOU NEED A LOAN FOR
The type of franchise you select, i.e. ' the opportunity' part of your vision will often dictate the type and amount of financing you need.
BUSINESS CAPITAL NEEDED TO PURCHASE A FRANCHISE
Depending on the nature of your chosen franchise you will need capital for one or all of the following -
Franchise fees / Franchise agreement purchase
Equipment
Leasehold Improvements
Working Capital / Royalty fees
FRANCHISE FEES ARE A PART OF YOUR OWNER EQUITY / DOWN PAYMENT
For the majority of clients we work with at 7 Park Avenue Financial they typically incorporate the actual franchise fee as part of their own capital /equity investment in the business - in effect, it's part of that ' down payment '.
DUE DILIGENCE IS REQUIRED WHEN PURCHASING A FRANCHISE
Most franchisors, often based primarily on their own experience have a strong sense of the total amt. of capital needed to be successful. With the amount of disclosure, franchisors are required to make these days the benefits to the franchisee are clear - so doing your homework in investigating the potential financial success of your business is key.
Repayment for equipment and leasehold improvements will typically come from the ongoing cash flow in your franchise. You of course know that, but the goal is to prove that to your lender/lenders. In Canada, those lenders are either specialty franchise lenders, banks via 2 types of specifically tailored programs, and misc asset and working capital firms in the general category of leasing companies or working capital providers.
YOUR BUSINESS PLAN AND CASH FLOW PROJECTIONS
Your ability to prove repayment for your loans will come from your business plan and cash flow forecast. It's an investment of time (with minimal cost) that will prove to your lender/lenders your ability to repay term and operating debt.
Most franchisees most certainly are not accountants, but spending some time understanding some basics around cash flow, break-even, and contingencies is a highly recommended pursuit. Advice in this area can easily come from your accountant, business advisor, even other franchisees you may choose to meet and talk to. Entrepreneurs should assume a realistic interest rate in their financing projections. One of the most popular ways to buy a franchise is via the Government Of Canada Small Business Loan Program.
In the majority of franchise financing in Canada, very little outside collateral is required. The franchise reputation, your business plan, ( 7 Park Avenue Financial prepares business plans that meet and exceed lender requirements ) your initial equity investment will more often than not carry you to reasonable chances of success.
PERSONAL CREDIT SCORE IS IMPORTANT
Lenders will though want to know how you have run your personal finances (credit bureau scores, net worth statements, etc) - lenders can be forgiven for treating most franchises as start-up businesses with the risk that comes with any startup. Interest rats will vary greatly based on the type and amount of financing you decide on.
CONCLUSION
If you're looking for the ' big reveal' on the truth around basic franchise financing in Canada seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the entrepreneurial dream a financeable reality.
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Stan Prokop
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