YOU ARE LOOKING FOR FRANCHISE LOANS!
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
LOOKING TO BUY A FRANCHISE BUSINESS AS A BUSINESS OWNER
Franchise loans in Canada. Is the financing for a 
franchisee opportunity any different than any other type of business lending/loan? The answer is no... And yes... so let's spend a bit of time defining those differences!
It's very safe to say that franchising is a sought-after business model in Canada as new franchisees embark on business ownership and entrepreneurialism ... all the reasons are clear - proven business strategies, verifiable examples of your success from existing franchisees, etc.
WHERE IS THE MONEY COMING FROM?
So the immediate problem then becomes: Where do I get the cash and financing to complete a successful transaction. Business loans for franchises will vary greatly. Here's where your financial search begins, and as we noted, there are some strong similarities in what you need for any business loan - some of them being a complete business plan and reasonable financial projections. You want to be able to demonstrate your focus to make your business profitable.
LOOKING FOR A SOLID FINANCING OPTION FOR YOUR FRANCHISE?
Although the majority of business financing in Canada requires personal guarantees from the owners as a backup plan for your lender, there are, in fact, ways to limit your guarantee when it comes to financing a franchise under certain requirements.
One of the best options in that area is to consider a BIL/CSBF loan, a federally sponsored program that significantly limits your personal guarantee to 25%. Now that's good news for the prospective franchisee. A good credit report around your personal finances is vital. Lower loan amounts are required when personal equity in the business is increased. Other factors will come into play around the type and amount of funding you need.
WHY GOVERNMENT LOANS?
These loans are available from selected financial institutions and are structured as a lump sum term loan with a loan amount of 350k, as noted, being possible. Your franchise requires ongoing working capital, which needs to be assessed relative to the types of financing available.
DO FRANCHISORS OFFER FINANCING FOR FRANCHISES?
You can, of course, explore financing options with your franchisor - we very quickly point out to clients they should expect some solid advice from the franchisor as to how things might work, but certainly don't expect direct financing in the form of a loan, etc. That's your job! Many franchisors may, in some cases, be associated with large national financing programs via bank partnerships, etc.
CAN YOU BUY A FRANCHISE WITH NO MONEY DOWN
Are there some potential franchisees who expect they can get 100% franchising for their proposed new business? Unfortunately, there are, and even more unfortunately they are wrong. You do need a personal equity component to your overall finance strategy, and what amount is that?
We can safely say is a minimum of 10% permanent equity. Still, you should be able to demonstrate access to other working capital sources that will, at a minimum, be able to help you get out of the gate until your revenue expectations are starting to be met.
So, where do franchise loans and financing for your new business come from in Canada? Many franchises need unique financing options, and in reality, it's a small handful of sources for an existing or new franchise.
TALK TO THE 7 PARK AVENUE FINANCIAL TEAM ABOUT FRANCHISE FUNDING OPTIONS
Various options will have specific requirements pertaining to that type of financing - it's hard work that requires professional assistance quite often. Talk to the 7 Park Avenue Financial team for the best way to fund your new business.
Oh, and by the way, we never recommend to clients that they entirely pay cash for their new business, as you do not want to put all your financial resources at risk in the event of a business failure or downturn. And by the way, That's just another great reason to ensure you are incorporated.
Lending for franchises in Canada comes from a small handful of specialized finance firms. However, most franchises under $ 350,000.00$ are financed by the government small business loan -In the U.S., it's the SBA loan. Financing can also be accomplished by cobbling together those two solutions with equipment financing and other forms of alternative working capital from non-bank lenders.
A good credit score is required. These loans in Canada are the equivalent of the U.S. SBA loans program with flexible repayment terms for these government loan products.
Recent changes to the Canada Small Business Financing program allow the franchise fee associated with the franchise agreement also to be financed! Franchise fees were previously not financeable under the program for the prospective franchise owner.
Many franchisees are mistakenly under the impression that franchisor financing is available directly - it is seldom the case! Therefore, franchise owners need to assess loan options from traditional and alternative lenders for their small business franchise purchase - allowing them to access the most money possible as required.
Collateral. Is it required from a franchisee for franchise loans? In general, we can say it is not. Although your overall credit history and personal net worth are factors in franchise lending, or any lending for that matter, an adequately structured franchise loan will, in fact, not require collateralization of personal assets ... and that's a good thing!
Your franchise loan presentation's overall business experience and personal demeanour are critical to a suitable financing package. Lenders look for people that have business and marketing savvy and who come across as positive and successful.
We identified in our title today 4 components of a successful finance lending strategy. In case you have missed them, we've purposely kept them subtle, but in fact, they are character, capacity, and collateral and credit history. Those, by the way, are components of any successful business financing, so as we said at the outset. At the same time, there are some nuances in franchise lending common-sense business applies also!
CONCLUSION
While avenues like angel investors and friends and family member loans are generally thought of for more money and unusual or experimental startups, they don't work well with franchising.
Speak to 7 Park Avenue Financial for solid franchise advisory services. A trusted, credible, and experienced Canadian business financing advisor who can assist you in ensuring lending for your franchisee dream is met with success.
FAQ: FREQUENTLY ASKED QUESTIONS
What is a franchise loan?
A franchise loan offers the opportunity to run a proven and established business, which means you'll get more than just capital. The franchisor sells their rights and use of their business model as you set up shop at the location and becoming an owner with all the benefits that entails: A great benefit of opening a franchised location versus over starting anew from scratch.
Is it hard to buy a franchise?
The cost of buying a franchise can be high, but some franchises only require a smaller initial investment. The most significant barrier to these types is usually the price tag: Some fees may run hundreds or even thousands.
There are a lot of factors to consider when it comes time for you to think about investing in any business, not just franchises. The price tag is often what stands between potential investors and success stories alike! When considering franchise opportunities, however, there's one thing most people need: information on how much these businesses cost them upfront as an investment with their initial capitalization fee? Ongoing operational costs such as rent/mortgage payments plus utilities must be considered.
Click here for the business finance track record of 7 Park Avenue Financial.
