YOU ARE LOOKING FOR A FRANCHISE LOAN BORROWING SOLUTIONS
SMALL BUSINESS FRANCHISING SUCCESS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses 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
Thousands of would-be Canadian entrepreneurs in Canada recognize the trend that franchising in Canada is a significant industry and a leading contributor to the economy as a whole.
WHERE IS THE MONEY COMING FROM FOR YOUR FRANCHISE?
The franchise business is hot and is an excellent opportunity for entrepreneurs looking for franchise ownership. Opening a franchise requires solid planning, I.E., where is the money coming from! Hopefully not from a family member as friends and family loans don't always work! Many franchises require a significant amount of capital.
So, that being said, how does the entrepreneur translate that opportunity into their ability to kick start franchise financing funding in a manner that makes getting a franchising loan a success as a part of their overall entrepreneurial strategy?
Let's share some solid advice on what type of financing you should utilize to complete your new or existing business acquisition. Yes, existing franchises can be purchased and financed also! Contrary to popular belief, franchisor financing financial assistance directly from your franchisor is not available.
THE OWNER EQUITY INVESTMENT IS IMPORTANT IN FRANCHISE FUNDING
The amount of money you put into the business from personal savings, etc., is critical in your potential sales and profit success. But two questions immediately arise: Do those funds necessarily guarantee you success based on how much you put in, and secondly, where do you access the balance of the finances you require?
BUSINESS AND MANAGEMENT EXPERIENCE IS IMPORTANT TO DEMONSTRATE TO THE LENDER
One somewhat intangible issue that always comes up is the ability of the entrepreneur/ borrower to demonstrate how much experience they have in a chosen industry or business. Such things as your outlook on being an entrepreneur/business owner (it's not as easy as you think) and matching your skills to the type of business you buy and finance are critical.
By the way, we think there are very few executives in even the largest, most successful corporations in Canada that have the total skills involving sales, marketing, operations and finance as a total skill set. Those people are the real superstars.
Naturally, one of the reasons you purchase a franchise is that you are buying into, hopefully, a proven system of a brand, business model, marketing and advertising assistance, etc.
EQUIPMENT FINANCING CAN BE AN INTEGRAL PART OF FINANCING YOUR FRANCHISE WITH A PAYMENT PLAN FOR ASSETS YOU NEED
OPM is essential when it comes to funding for a franchisee, and that, of course, stands for Other People Money, which represents the balance o the funding you need for your franchise purchase.
In Canada, along with your equity, or we'll call it a down payment, the balance of your financing comes from either a commercial finance company that either specializes in franchise finance or one that can complement the funding you need. An excellent example of that is an equipment finance company that can acquire and lease assets for you such as POS systems, other hard assets, vehicles, etc. - allowing you to put more money into working capital needs.
In general, anywhere from 10 to 40%, sometimes more, is required as a down payment or equity contribution to your business. We quickly add that that doesn't necessarily mean that money is permanently contributed or 'tied up ', but you must show that you have access to liquidity to get the business off to a good start for working capital and growth purposes.
THE GOVERNMENT SMALL BUSINESS LOAN IS A GREAT WAY TO FUND THE FRANCHISEE
Two key points for potential franchise owners - a solid majority of the franchising loan scenario in Canada is made via the government BIL/CSBF program. It offers great rates, terms and structures for the acquisition of your business. The program falls a bit when it comes to a service-type business where there are limited or no assets to purchase / finance. Talk to the 7 Park Avenue Financial team about different institutions that participate in the program and how they do that.
A PROPER LOAN PACKAGE SUBMISSION IS KEY TO FINANCING NEEDS
Our other key point is to have a crisp 'package' in place for a complete business plan, industry overview, financial projections, etc. This isn't rocket science, and it sometimes seems when it comes to getting a good proposal in front of your lender.
That good credit score and credit report from the credit bureau, typically one over 650, is also key to loan approval around your personal finances, tax returns, etc. Many franchisors will expect a reasonable personal net worth to demonstrate financial stability.
Don't forget to address and include the need for ongoing working capital for day-to-day funding for sufficient funds to run the business daily.
The purchaser typically pays for the franchise fee in our franchise agreement. It can be financed via the Canada Small Business Financing program, allowing you to fund that amount and save money for other potential expenditures and start up costs that need to be financed. A solid loan application will lead to the best possible interest rates.
CONCLUSION - FINANCING A FRANCHISE IN CANADA
7 Park Avenue Financial is here to help you customize a franchise lending program and identify financing options for a small business loan, one that meets your needs, whether you are purchasing a new franchise or buying an existing franchise from a current franchisee who is selling their business.
For assistance in acquiring the franchise and key finance needs around equipment, working capital real estate, and debt financing, work with our team to ensure you meet your goals. To be successful for bank loans and non-bank deals, you need an experienced partner like 7 Park Avenue Financial to ensure you meet certain requirements of financing.
You can't afford to miss out on your business purchase just because of a poor presentation package. It can also be easily accomplished by using an expert such as 7 Park Avenue Financial, a Canadian business financing advisor who is experienced and has success and knowledge of franchise finance regarding advisory services and financing solutions in the franchise area.
FAQ: FREQUENTLY ASKED QUESTIONS
Can you get financing for a franchise?
Today, there are many different types of loans to choose from. These include traditional bank loans or Government SBL-backed loans - which will fit particular needs depending on the type and size (or growth) level at hand! Understanding costs involved and requirements with each option and sources that could work best based on personal credit scores. It's essential not only to know what kind of financing is right for the franchisee, as well as understanding costs before investing time into searching out funding options.
How do you finance a franchise?
In business franchising, there are many different avenues to take when looking into getting funding. If you need money and your prospective franchisor cannot help out directly with what is required, franchisees consider commercial bank loans or government-guaranteed small business loans. Alternative non-bank lenders can also provide capital and can often require less personal information than traditional routes might entail or require. The Canadian Franchise Association can also provide financial guidance.
Click here for the business finance track record of 7 Park Avenue Financial
