YOU’RE LOOKING FOR FRANCHISE FUNDING SOLUTIONS!
FUNDING FOR YOUR NEW BUSINESS !
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
Franchise funding options in Canada. At certain points, many potential franchisees in the Canadian marketplace get the feeling that this is a bit tougher than they thought! So success in this area revolves around the right information and expertise when it comes to franchising loans that are available, and make sense.
In some cases, you're simply the ' newbie- a first-time franchisee that’s looking for funding for the entrepreneurial dream of owning your own business. In other cases, you might actually already own a franchise and want to expand.
FRANCHISING IS A POPULAR METHOD OF STARTING AND OWNING A BUSINESS
Top experts in the field tell us that the majority of the franchises out there and there are tens of thousands do in fact make money. As a result, there are in fact lending and financial resources available for reputable franchises with solid owners with good overall business experience. A franchise fee is required to acquire the franchise and this amount is typically not financeable.
THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM - A GREAT WAY TO FINANCE A FRANCHISE
The key to understanding the financing challenge is the recognition that you as the business owner must have a financial commitment to the business. So it is therefore very unreasonable to both expect and assume that you will ever receive ' 100% financing ' on your purchase. We would hasten to add though that many franchises in Canada are financed under the specialized ' BIL ' loan program, and that financing requires only a 10% permanent equity contribution, although we can discount the need and requirement for working capital as the business starts and grows. The interest rate on the Canada Small Business Financing Loan is very competitive, given the nature of the loan- as well repayment terms can be structured to meet the initial purchase challenges.
A TERM LOAN IS A LOGICAL FRANCHISE ACQUISITION FINANCING STRATEGY
Term loans tend to be the most utilized method of financing a franchise - they can range anywhere from 3-10 years depending on the provider. Naturally, it goes without saying that you have to have the ability to demonstrate a premises lease and a franchise agreement that backs up the loan amortization!
BUSINESS PLANS ARE A KEY REQUIREMENT
The basic initial requirement of any business financing and it certainly is the case for franchisee finance is that you need to demonstrate a solid business plan and financial forecast. If you need help in preparing one of the numerous avenues of assistance are available. At 7 Park Avenue Financial we prepare a business plan for clients that meets and exceed the requirements of all bank and commercial lenders for small business loans and other types of financing. Whether you are buying a new franchise or an existing one a strong application package is required.
FRANCHISE FINANCE LENDING COMPANIES IN CANADA
There are 3 basic categories of franchise lenders in Canada. They are the specialty lender. the banks (more on that in a moment), and miscellaneous commercial finance firms that provide different levels of assistance in some but not the total financing need. These might include equipment lessors and working capital specialists. Interest rates on bank loans and other commercial loans are at an all-time low and conducive to business borrowing.
YOUR DOWN PAYMENT/ EQUITY CONTRIBUTION IS CRITICAL
Franchise owners tend to get their initial equity contributions from savings, family and friends, or via a partnership type arrangement. In general, we can safely say that the franchisor itself is not interested in providing financial assistance, so almost always never count on that! A good credit score is essential in any small business borrowing for a business loan of almost any type.
We referenced ' banks '. While banks, in general, will not finance a franchise directly under a start-up term loan thousands of franchises are in fact funded through the BIL/CSBF loan that banks administer and run for the government. This loan is the equivalent of U.S. SBA loans. This is, on balance, a great source of financing for any start-up, franchises included. In certain very specialized industries banks might in fact run a program directly with a franchisor - these franchisors have to be the crème de la crème of the franchise industry. (Think ' hockey and donuts!)
In general business owners looking for a small business loan and who have good credit histories have access to a maximum number of potential financing solutions. Lenders will always look to personal finances as an indication of how you will run your business.
WHY BUYING A FRANCHISE IS A GOOD IDEA IN THE SME ECONOMY IN CANADA
In certain cases you might be looking at the concept of ' franchising ‘, namely buying from an existing franchisee in your chose franchisor's network. There some solid reasons to look at this method of entering franchising with the same type of business loans -
Customers and financial performance can be documented
Staff and procedures are already in place and hopefully working!
It's much easier to determine financial performance, profits, growth prospects, and asset values.
As in real estate, you may even get a deal with that ' motivated seller'!
CONCLUSION
So, the bottom line on a franchise purchase and the type of loan/ financing option you need? Simply that armed with the right information and expert assistance the franchise financing challenge might not be as tough as you thought. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchise funding options expertise for a franchise business.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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