Franchise Finance For Financing A Franchise Business

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FINANCING SOLUTIONS FOR BUYING A FRANCHISE IN CANADA

Misconceptions. They are all over the place when it comes to financing a franchise business successfully and properly looking for franchises for sale . Let's wade into some of the key factors that allow you to complete a transaction that meets your business and personal goals as an entrepreneur in the Canadian franchise finance industry.

WORRY-FREE FRANCHISE LOANS IN CANADA

As noted, there is a lot of poor information about the challenges of financing a franchise in Canada. Let's focus on what's important, what's achievable, and what you don’t have to worry about.

THE CHALLENGE OF FINANCING A FRANCHISE

We can relate to clients making a significant life change and personal financial investment to purchase a franchise. You have access to some funds, but the challenge of financing their new venture properly seems somewhat daunting.

ARE YOU PREPARED TO BE SUCCESSFUL IN A FRANCHISING LOAN

Is there financial assistance in completing a franchise properly? Absolutely, but you must be prepared in every sense of the word.

CAN YOU GET A LOAN FOR A FRANCHISE? HERE'S THE FIRST STEP!

Step one is often to identify the total amount of borrowing you need properly. Unfortunately, we meet with some franchisees that have completed a franchise closing, only to find they are quickly running out of working capital to run their business on an ongoing basis. So close, yet so far.

WHAT CAN'T YOU FINANCE WHEN ADDRESSING FINANCE FOR FRANCHISE COSTS

The costs to finance a franchise involve what we call the soft costs to set up your business; they typically include franchise fees and professional fees such as those for an accountant, lawyer, etc. In our experience, it makes strong sense for the owner to finance those soft costs themselves, leaving the hard assets and working capital for the franchise loan itself.

Here's something that surprises clients, as it appears to be a contradiction in terms. Canadian business financing itself is a challenge, but franchise finance is not! That is because they are some excellent programs that focus specifically on financing a franchise business.

If done properly, and don’t quote us on this, it’s almost a 'slam dunk'! A huge, and we mean a huge portion of all franchises in Canada are financed by a guy named Bill.

THE CANADA SMALL BUSINESS FINANCING PROGRAM

So who is Bill? Actually, we have spelled his name wrong because B I L is the acronym for the Government federal loan program that typically finances most franchises in Canada.

So you thought franchise financing under the BIL might be difficult or onerous. If properly presented and prepared, you have just been approved for, bar none, the best small business financing program in Canada - great terms of 5-7 years, limited personal guarantees, and, are you ready, great rates and structures on the financing itself.

Is financing a franchise business easy or hard? Our simple answer to clients is that if you are prepared, it's easy. If not, you are guaranteed to fail.

REQUIREMENTS FOR A FRANCHISE LOAN APPLICATION FOR A FRANCHISE IN CANADA

Key elements of being prepared a business plan and cash flow that demonstrates your experience, the business potential, and, what the lender wants to see, cash flow to show repayment of the debt. ( 7 Park Avenue Financial prepares business plans that meet and exceed bank and commercial lender requirements )

OPM doesn’t work in Canada almost anywhere in Canadian business financing. Franchisor finance directly from the franchisor is typically never available - they sell franchises, not finance them! OPM is other people's money, simply signifying that your own investment must be reasonable and shared with the loan investment to represent the full financing.

To put it even more simply, you need a reasonable down payment when it comes to being successful in franchise opportunities in Canada. Franchisees with poor or derogatory personal credit histories need not apply, in our opinion. Why? Because the lender views a franchise business in the context of how you have managed your own personal affairs.

CONCLUSION - FINANCING FOR FRANCHISE OPPORTUNITIES IN CANADA

So is there a bottom line on your quest for Canadian franchise finance success? Yes, and it's pretty simple - avail yourself of financing geared toward this type of business, be prepared from a presentation perspective, and commit a reasonable amount of your own funds to the transaction, sharing the risk with the loan provider.

FAQ: FREQUENTLY ASKED QUESTIONS

In today's marketplace, it can be difficult to get the financing that you need. Franchises are getting more popular and this means there is a higher demand for people who want to open their own franchises or buy existing ones. The best loans for franchise financing help with these needs by providing options like Government SBL Loans, term loans, lines of credit and more. These types of loan programs will provide quick access to a business venture .

Banks and credit unions and commercial finance companies are an excellent source of financing for businesses, including franchises. ... Franchisees can apply for SBL loans through their bank or credit union. When you are a business owner, it is important to know the different options for loan financing.

Click here for the business finance track record of 7 Park Avenue Financial.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

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