YOU ARE LOOKING FOR BUSINESS LOAN FOR A FRANCHISE PURCHASE!
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?
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EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Financing a franchise purchase in Canada often involves a ' trust factor ' that is being sought by the franchisee when it comes to choices and alternatives in accessing the right capital for the business purchase. That purchase can be from the franchisor directly or from an existing franchisee with the authorization to sell their small business. Let's dig in.
HOW CAN THE FRANCHISEE ADDRESS FINANCING THE NEW BUSINESS PURCHASE
Often the franchise is stuck at what we call the ' what to do ' phase of the business purchase decision. While many regard Canadian chartered banks as the solution for buying the franchise, the hard truth is that this type of business financing is rarely done directly by the bank.
WHAT FRANCHISE ARE YOU BUYING?
It requires the purchase of one of the larger and well-known names in the franchise industry. This eliminates hundreds of other franchises where the franchisor has not established a relationship directly with a bank program for a franchise agreement for their franchisees.
THREE FRANCHISE FINANCING SOLUTIONS FOR CANADIAN ENTREPRENEURS
What then are three solutions available for the entrepreneur who wishes to enter this industry? We just mentioned purchasing one of the larger names ' in the business where established programs are in place. (By the way, that doesn't guarantee approval, it gives you only the right to apply!).
WHAT IS A SPECIALTY FRANCHISE LENDER
The second solution is to work with a specialty franchise finance lender, which has some constraints around what and who they are willing to finance. The third solution? It's to cobble together some financing via commercial finance firms that might consider financing specific assets such as equipment, leaseholds (difficult to finance), as well as working capital needs.
THE CANADA SMALL BUSINESS FINANCING PROGRAM FINANCES MANY FRANCHISES
But wait... there's more! One tried and tested solution is to utilize the Government Small Business Loan, aka the ' SBL. ' While not originally intended to finance the purchase of a franchise, it has become the ' go-to ' method of franchising finance for thousands of entrepreneurs. The Canada Small Business Financing Program's interest rate is desirable, and the loan has numerous other benefits and flexibility. Borrowers must demonstrate a good credit score and personal credit history. While other financing forms vary greatly when purchasing a franchise business, the government program rate is fixed at just several points over the prime rate.
WHY ARE GOVERNMENT LOANS PERFECT FOR FRANCHISE FINANCING
What makes the govt loan so attractive is that it is easier to get approval because it guarantees most of the loan to the bank. Rates are also attractive, and that includes the ability to prepay without penalty. Additionally, not personal collateral is attached to the transaction, and those leaseholds, often difficult to finance, are fully financeable under the program.
WHAT ARE THE REQUIREMENTS OF THE GOVERNMENT SMALL BUSINESS LOAN
Franchise purchases up to 350,000$ are financeable under the SBL. Basic requirements are a good personal credit history, a positive personal net worth, as well as being able to demonstrate and provide a strong loan package that includes a business plan, cash flow projection, etc. Remember the bank (and the govt) is not an equity partner with you; they want to be repaid from projected cash flow/profits.) 7 Park Avenue Financial business plans that we prepare for clients meet and exceed bank and commercial lender requirements.
CONCLUSION
If you're looking for franchise capital and are reluctant to pledge personal assets, homes, etc., seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing needs. It's virtually the end of your ' what to do ' phase in financing a franchise purchase in Canada.
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Stan Prokop
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