YOU’RE LOOKING FOR THE BEST IN FRANCHISING FINANCE SOLUTIONS
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
Franchise business loans in Canada can easily give the Canadian franchisee that ' out of control ' feeling when needed. So when it comes to franchising finance, where does one go to? Who can you count on for assistance? Let's dig in.
EVALUATING YOUR FINANCING NEEDS IN A FRANCHISE PURCHASE
Top industry experts tell us that over 30% of those folks considering purchasing a business in this industry rarely consider at the outset the financing and cost of the business!
DO BANKS FINANCE FRANCHISES IN CANADA?
Even more so of a predicament is that the average franchisee considers ' the bank ' as the logical (only?) source of capital for their business purchase. The reality? It's that banks directly finance very few franchises. Many are financing in an ' indirect' manner; more about that one a bit later.
So who then is doing the financing in this industry? Unlike our counterparts in the U.S., financing solutions for the purchase of a franchise hardly abound, but the good news is that they are still available - you have to know the lay of the land.
Certain specialty franchise financing firms have major programs in place for specific franchisors. More often than not, these are tier 1' type names for major brands with strong brand recognition. If your business purchase does not fall into that category, you're immediate challenged?
By the way, franchisor financing is typically never available - they sell franchises, they don't finance them.
LET 7 PARK AVENUE FINANCIAL SHOW YOU HOW THE CANADA SMALL BUSINESS FINANCING PROGRAM CAN HELP YOU PURCHASE A FRANCHISE
We spoke of an ' indirect ' manner to finance your franchise via a bank. That is achieved under the CSBF program sponsored /administered by INDUSTRY CANADA, a Cdn government branch. Commonly called the ' SBL ' Small business loan, the banks run this program, but most of the loan is ' guaranteed ' by the government. This is our Canadian version of government loans in the United States, aka ' sba loans '. It's a solid business loan solution to buying a franchise and comes with attractive interest rates also. Repayment terms for this type of loan, a ' term loan ' are also attractive and come with no prepayment penalty.
GETTING EXPERT HELP IN GOVERNMENT LOANS
While we think it's a great program for franchising loans, our problem with the SBL loan is that each bank has its own twist and interpretation on the requirements. So it's incumbent on the franchisee to ensure they know, or the help of an advisor, to maximize success in financing approval under this program. Make sure you can prove and provide a good credit score and personal credit history are required, and you should ensure you have a solid application package - that includes a business plan, cash flow projection, and a clear use of funds. 7 Park Avenue business plans and loan packages meet and exceed bank, credit union, and commercial lender requirements.
Going it alone in business is never a great feeling, especially in start-up or business purchase mode, so don't forget to draw on the experience of your contacts with a lawyer, accountant, a business advisor, etc. It's their skill and expertise that will change from losing to winning.
OTHER SOURCES OF FRANCHISE FUNDING
Financing can also be significantly complemented via equipment financing, working capital term loans, working capital credit lines, etc.
Don't also forget that an existing franchise can also be financing in much the same method as a start-up/turn key scenario. In some cases, it reduces risk as you have access to financial statements, asset lists, etc., of the existing owner. Naturally, the approval of the franchisor is also required.
In some cases real estate might actually be a part of your franchise purchase, requiring additional funding. It really depends on the type of loan you require and the asset/assets you are financing.
Your franchise agreement will spell out the franchise fee and royalty arrangements of the franchise - typically franchise owners are responsible to pay the franchise fees separately, as they are typically not financeable. Of course, you can buy a new franchise, or an existing one - that latter process sometimes called ' refranchising '. Many franchises are purchased from existing sellers. Your financing options will vary greatly if a business is already in place. Again, good credit is still required!
CONCLUSION
So, bottom line for potential franchise owners? We have shown there are business finance options available for new franchisees - You don't have to settle for less when you've got some knowledge and experience behind you. If you want to eliminate that ' out of control' feeling in financing a franchise - seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in your franchising finance needs.
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Stan Prokop
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