RIGOR . Your Requirement In The Franchise Finance Process!
OVERVIEW – . Information on franchise banking solutions in Canada . What is the expectation of the Canadian franchisee for business loan financing options ? Timing is everything!
Franchise banking solutions in Canada. Can the Canadian would be franchisee expect that business loan financing options appear and can be finalized at the speed of light?
(We’re told that a photon of light in a vacuum fluctuates at 50 quintillionths of a second!) . We don't think so and here's why achieving success in franchising financing in Canada happens at a slower pace than you think - forcing you to accept our recommendation - be prepared!Awhile ago we read a profile of a U.S. franchisee - the theme of that article being that even though the husband / wife team felt they were very experienced in many of the facets of franchising they in fact had realized that the whole business loan / financing process required ' RIGOR '. Let's examine some of that rigor requirement. Let's dig in!
Getting back that RIGOR.... The fact of the matter is that top experts in the field of franchise in Canada maintain that the actual financing process ties in to many other aspects of your franchise purchase decision. They include the size and nature of your purchase (i.e. asset based or service based , hospitality, etc ) as well as the need to tie in key aspects of the franchise industry into your finance plan . That for example might include factoring royalty payments into your cash flows, and, as or more importantly, determining what elements of your franchise needs can't be financed.
Items that cannot typically be financed include the actual franchise fee itself, or the 'financial goodwill ' component of a franchise you wish to purchase that is already existing, perhaps for sale by an existing franchisee, or a corporate / company store from your chosen franchisor .
While many of our Canadian chartered banks tout franchising banking as parts of their portfolios of commercial lending the reality is that each bank develops and assesses their own criteria when it comes to what they will lend against. That's one of the reasons franchise banking loan solutions do not happen at the speed of light - it’s a process for you the franchisee to get a banker on side to both support your application, and ensure it’s consistent with that specific banks interpretation of a success financing in franchising.
The large majority of franchises in Canada are in fact financed by the Government SBL loan program, which we maintain is quite perfectly suited to your business loan financing options. So if that’s the case then the whole process must happen at the speed of light, right. Not so fast! Each bank assesses the criteria for this financing in a different manner.
While the SBL / BIL loan is in fact suited to the majority of franchises each bank has different criteria to complete a successful financing. Some require a 10% permanent equity component, some require 50%... some finance 90% of your assets required, some only 75%. As you can imagine we're reluctant to name names, because we hang out with these guys and ladies, so we're protecting the innocent!
A solid franchise finance solution, whether it comes from a specialty firm or under the program we named still though involves the same key basics - a good business plan, reasonable cash flow and financial projections, an owner experience component, and reasonable business/credit history of the owners.
Our bottom line - allow for time to complete the financing , and seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the help you need to complete your entrepreneurial dream.
Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :
CANADIAN FRANCHISE BANKING BUSINESS LOAN FINANCING OPTIONS
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
Stan Prokop
