YOU’RE LOOKING FOR FRANCHISE FINANCE ASSISTANCE!
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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
Franchising business loans in Canada often come with a timeline experience that most franchisees have a huge problem overcoming. How can that timeline for ultimate franchising loan success be shortened? Let's dig in.
HOW TO GET APPROVED FOR A FRANCHISE LOAN?
Whether the potential franchisee is either purchasing a turnkey operation or looking for a 'refranchising' opportunity (i.e. buying an existing business), it’s all about getting approved. In certain cases, the type of business opportunity that you purchase will affect financing approval - that might be either for the size of the transaction (too small / too large) or, in some cases, the type of business you are looking at. The bottom line, a franchise agreement can pertain to a new or existing franchise business.
NUMEROUS BUSINESS OPPORTUNITIES EXIST IN FRANCHISING
Top experts tell us that currently, businesses in the health care and hospitality sectors are ' hot ' - but the multitude of franchise opportunities out there continues to be enormous. The industry itself powers close to half the economy, according to some pundits.
OWNER EQUITY/ DOWN PAYMENT IS A CHALLENGE
The shortfall that a franchisee faces when it comes to a total financing package often comes from owner equity. This certainly makes it even more difficult for entrepreneurs looking to purchase multi-unit operations.
DO FRANCHISORS OFFER FINANCING?
Rarely does the franchisor in Canada offer financing options - they sell franchises, they don't finance them - with their franchise fees and royalties helping to finance the expansion of their network. Franchisor financing is generally not available!
DO BANKS OFFER FRANCHISE LOANS?
In certain cases, larger well-known franchises with broad geographic exposure in Canada have aligned themselves with Canadian banks to offer a finance program. However, this by no means guarantees approval, and traditional lending criteria still apply. If franchisors were a bit more serious about assisting in the financing process, some solutions might be lower franchise fees, royalty flexibility, subsidized financing, etc. Safe to say that probably won't happen!
HERE IS A LIST OF FRANCHISE LENDING SOLUTIONS - HOW TO SECURE FINANCE TO BUY A FRANCHISE
Three basic finance solutions are available to the franchisee - they include:
Specialty franchise financing
The Government CSBF loan - This is the Canadian version of U.S. ' SBA loans'. The Canada, Small Business Financing Program, is one of the most popular financing methods for a franchise - a good credit score and personal finances, and credit history are required. The interest rate on government loans is desirable. Numerous other benefits come from utilizing this type of loan, such as no prepayment penalty, limited personal guarantee, repayment terms structured to your needs for cash flow, etc.
DON'T FORGET YOUR WORKING CAPITAL NEEDS FOR THE LONG TERM
Supplemental financing by various commercial financing firms offers equipment financing, merchant cash advances, working capital term loans, etc.
One or a combination of any of the above solutions will start your journey to financing success with the shortest timeline possible. At the end of the day, it’s about expertise and information available to the borrower that will ensure faster credit approval.
HOW TO PREPARE A LOAN PACKAGE APPLICATION TO BUY A FRANCHISE
Information that helps shorten your approval timeline includes a proper loan package that consists of owner personal financial info, a business plan or strong executive summary, a cash flow and loan repayment forecast, and pertinent information relating to the franchise you are purchasing regarding franchisor history/prospects. 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.
IS REAL ESTATE A PART OF YOUR FRANCHISE PACKAGE?
Franchise owners, on occasion, may have to consider real estate as a component of the financing, which is typically handled separately outside the acquisition loan. Financing solutions in franchising reflect the type of loan you require to both acquire and run the business! Your good credit will go a long way to ensure options available for the business purchase are viable. The new franchisee will find that a financing option will vary greatly based on the amount and type of funding needed.
CONCLUSION
A small business loan is not as challenging as you might think in acquiring franchises. If you are focused on how to buy a franchise in Canada and are looking for fast and successful franchising loan approval, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can shorten timelines and ensure you know all options your franchise purchase.
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Stan Prokop
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