YOU’RE LOOKING FOR FRANCHISE FINANCING 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
Financing franchises in Canada. Boy, would it help to know some of ' the rules ' when it comes to franchise funding going smoothly? We know some of those rules, so let's dig n.
IS FINANCING YOUR BIGGEST CHALLENGE IN FRANCHISE ACQUISITION?
To say that the actual successful acquisition and financing approval for a franchise is a big step for the entrepreneur is a bit of an understatement. Coupled with all the selection, administrative and legal issues that surround acquiring a franchise comes the finance challenge. In some ways, entrepreneurs view it as the biggest challenge.
THE ROLE OF DOWN PAYMENT AND OWNER EQUITY IN SUCCESSFUL FRANCHISING
The amount of funds you yourself have to invest often plays a key role in your final franchise decision. While a good portion of your total purchase will in fact be the debt of some sort - (leases, loans, working capital, etc) there is the equity component you have to consider. You may not be aware, but many franchisors in fact make a franchisee decision related directly to the amount you have to invest, and they are pretty clear about that on their website and introductions with you.
WHERE WILL YOUR DOWN PAYMENT FOR THE FRANCHISE COME FROM?
So where do clients we talk to raise equity for their ' down payment ' portion of the transaction? Some collapse savings, some approach friends and family. While using savings as a key component of your equity in the deal it is certainly not preferred to collapse registered type investments, RRSP's etc in order to avoid the tax bite.
When approaching a bank or a specialized finance firm they will absolutely be focusing on that down payment. And it’s not a question of just showing up with the down payment ability - the bank or lender will typically want to know how it was achieved.
DO BANKS FINANCE FRANCHISES - SPOILER ALERT - SOMETIMES!
We have referenced banks as a source of financing for financing franchises - that needs to be clarified. Unless you are a very high net worth and valued client of the bank it is somewhat, in fact quite doubtful that the bank will finance the purchase directly. While Canadian chartered banks do realize the benefits of proven business models and market share and systems in place to succeed they rarely finance a franchise outright.
THE GOVERNMENT SMALL BUSINESS FINANCING PROGRAM IS AN EXCELLENT SOLUTION FOR FUNDING YOUR FRANCHISE
What they do though is to in many cases; utilize the Canadian BIL/CSBF loan program that is provided under the auspices of the government. It's a perfect match for franchise funding by the way, even though we suspect it was designed for that!
KEY ATTRIBUTES OF THE GOVERNMENT GUARANTEED LOAN PROGRAM IN CANADA
The true beauty of that loan also is the fact that no outside collateral is required, so you won’t be asked to collateralize your home, other personal assets etc. Clients are always asking us for a clear explanation of the loan criteria for a BIL Franchise loan. The basic criteria is as follows -
- Good personal credit history
- Ability to contribute 10% minimum permanent equity in the business
- You must have business experience and be able to demonstrate that in a business plan and cash flow forecast
- Your business must have a permanent address and lease that is at least as long as the loan term
- You should be able to demonstrate commitment and enthusiasm - just ' buying a job ' doesn't cut it!
In many ways, you can expect that the bank and franchisor are looking at the same things - your business experience, your financial stability, etc. Remember though that the bank or specialized franchise lender isn't an equity partner, they also won’t be sharing in monthly royalties.
ARE BUSINESS PLANS AND CASH FLOW PROJECTIONS REQUIRED?
So ensure your business plan and cash flow reflects profits and repayment ability! Don't forget also to address the fact that you have working capital and potential long term financing needs, which need to be well thought out. At 7 Park Avenue Financial, we prepare business plans for our clients that meet and exceed the requirements of all commercial lenders.
CONCLUSION
Can franchise funding go smoothly? It can with the right knowledge, info and resources. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your franchise financing needs via the right ' RULES'!
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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