Franchise Business Loans In Canada. What You Can And Can’t Finance With A Franchising Loan

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Avoid Doing Something Wrong With A Franchising Loan 

 

 

Franchise business loans in Canada.  Can the prospective franchisee avoid doing something really wrong when arranging their franchising loan? We think we can help clarify, so let's dig in.

 

 

PICKING YOUR FRANCHISE / FINANCING YOUR FRANCHISE PURCHASE

 

While a lot of entrepreneurs focus on the particular business or industry segment they are looking to participate in they sometimes sorely miss looking at how the franchise financing industry operates. It's somewhat of a given that it’s up to you to pick the franchise that best suits your talent, expertise, and budget.  But when it comes to financing your business are you 100% sure of the expectations of your lender or lenders.

 

If there is any good news is that you do have some solid options available to yourself when financing your new business.

 

  

KEY ELEMENTS OF A  FRANCHISE LOAN FINANCING   

 

What exactly are some of the key elements of any franchise finance scenario? Well, they include the franchise fee, equipment, leaseholds, working capital, and ongoing capital and cash flow needs.

 

 THE NECESSITY TO FINANCE LEASEHOLD IMPROVEMENTS 

 

Leaseholds are one of the most misunderstood aspects of the franchise finance mystery or conundrum.  Typical leaseholds might include construction, HVAC, plumbing, lighting drywall, etc. If your franchise is not going to be fully financed by a specialty franchise lender then the best solution to financing leaseholds is under the auspices of the Govt small business loan program, In fact, this program was designed solely for two asset categories - equipment... and the leaseholds we have been talking about.

 

In certain cases, the franchise lender may wish the co-operation of your landlord when it comes to what is understood as collateral in the terms of your agreement with the landlord. The situation can sometimes become more complex if there is not clarity and understanding around certain assets that you as a franchisee may have thought was a leasehold improvement as opposed to assets that become attached to the building such as oven hoods, etc. (That’s in the case of restaurants, etc)

 

At the end of the day, it’s both the combined quality of the franchise you are buying as well as your own financial strength as determined by opening balance sheet and projected revenues and profits. Business plans and cash flow projections are a necessity in franchise loans - At 7 Park Avenue Financial we prepare a business plan for clients that meet and exceed the requirements of lenders.

 

If there is one continuous misunderstanding or misconception that we see in discussions with clients on franchise business loans it’s as follows: The franchisor rarely plays a key role in franchise finance. That’s your job or the job of you and your Canadian business financing advisor. At the end of the day, your goal is simple - you want to be in a position to raise the right amount of capital you need to open and develop your business for success. Only the smallest percentage of franchisors in Canada offer any real tangible financing assistance.

 

  

4 TYPES OF FRANCHISE LENDERS  

 

Who are in fact the lenders you should be working with when arranging your franchise loan? In broad categories they are:

 

SPECIALTY FRANCHISE LENDERS

THE GOVERNMENT SMALL BUSINESS LOAN (very well suited to franchise finance) These loans are somewhat similar to U.S. ' sba loans'

EQUIPMENT LESSORS - They finance equipment and in some cases leaseholds

CANADIAN CHARTERED BANKS - Ongoing working capital and cash management -

 

The reality is for many franchises the type of loan you need may in fact be a cobbling together of a number of different finance solutions. In some franchises, there may even be a real estate component that can be often addressed separately.

 

Important to note also that you can buy a new franchise or one being sold from a franchisee that is selling, with the approval of the franchisor of course.

 

DO BANKS REALLY FINANCE FRANCHISES? YOU DECIDE!

 

Since our theme is ' avoiding doing something wrong ' in franchisee finance it’s important for us to clarify bank loans in this industry segment. While a bank would consider financing your business directly it would place heavy reliance on your equity in the business, your personal credit, and collateral that you might have in savings, your home, etc.  In our opinion where the banks do a better job is in the underwriting of the BIL loan when it comes to direct franchisee finance. Franchisees should ensure they can demonstrate a good credit score in personal finances as well as a reasonable net worth , which will also affect the interest rate they can achieve. Interest rates are at an all-time low for every type of business financing and won't vary greatly in most franchise funding alternatives .

 

  

CONCLUSION  

 

To avoid making tragic, costly and time wasting mistakes in a franchising loan consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can asset you with franchise business loans that make sense for your future investment  and success.

 

 

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

How To Get Franchise Financing In Canada

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How To Finance A Franchise In Canada

 

 

Financing a franchise and the purchase of that business is no doubt on of the larger decisions in the entrepreneurs life. It is safe to say that when we meet potential franchisees at 7 Park Avenue Financial they want some solid options on funding and financing their new business.

Franchise loans in Canada to some extent are limited vis a vis who finances these businesses - it is therefore important to know who the players are and what lending options are available from franchise lenders.

Business people can be forgiven when they seem skeptical around whether franchises can be easily financed in the current business environment . After the 2008-2009 worldwide recession business loans of all type in many ways became more difficult to access. The bottom line though is that funding is still available, and the lending criteria and solutions are not as demanding as they might think.

No business loan is a cake walk - therefore the preparation in the franchise loan process is key to ultimate financing success.

 

How Does Franchise Financing Work ?

The way we like to look at the ' being prepared ' process is essentially in two key categories - having a strong proposal and ensuring you can meet the basic qualifications for the franchise loan . And by the way, that also means being able to prove you have some solid business experience. Keeping up your part of the bargain is also key ! What is that?

It's your equity investment of down payment into the business, the balance coming from your franchise finance loan funding. Suffice to say that there is typically no 100% financing in this area of Canadian business.

One key aspect of franchise risk is that fact that it is probably actually more easy to secure business franchise funding than any other normal start up since you have the benefit of a ' brand ' and ' reputation' backing you .. I.e. the Franchisor.

When it comes to your ' deposit ' or equity position in the loan these funds typically come from various parts of your 'net worth '. While you may think that you have to tap into major savings or home equity, or collapse RRSP's, the reality is that you need to come up with anywhere from 20-40% , generally speaking , of your desired loan amount.

Personal credit history is also a key aspect of the franchise loan .Unfortunately, and we run into this almost all the time, many franchisees don’t have a sense of how the franchise funding lenders assess their personal credit history. It's more simply than you think. The entire personal credit history of everyone in Canada comes down to a numerical score at the credit bureau. Borrowers can easily check their credit scores with a local credit bureau, and by the way the 'magic score ' in most business loans is 650. Poor credit histories make it close to impossible to achieve almost any type of business loan, including franchise loans.

Next steps generally revolve around assessing your financing options. For some of the larger franchise chains one or two well known independent finance companies can handle all your franchising needs from a lending / loan viewpoint. But, here’s the kicker, the majority of franchises in Canada are funded by the Government Small Business Loan program .

Key benefits of the loan include:

Flexible rates

Terms of 2-5 years

Attractive structures including some pre payment and interest only options,

Low personal guarantees - typically 10% of the loan

Naturally you want to expedite your transaction. That is done by ensuring you have a crisp business plan and financial forecast in place - highlighting your business experiences, profit and cash flow potential, and info on the success of your franchisor as your new partner in Canadian business. You simply want to focus on one thing, showing your ability to repay the franchise loan.

Supplemental financing can also be achieved quite creatively if you have the right assistance - that might come in the form of a merchant advance loan against future sales, equipment leasing, or a straight unsecured working capital term loan.

Franchise Finance Options In Canada

So the good news is you have some great options in franchise finance and financing your new business. It’s up to you to assess those options, be prepared to present your plan. Want some great assistance? Seek out and speak to a trusted credible and experienced Canadian business financing advisor with a track record of business finance success in franchise finance funding.


7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

How To Finance A Franchise ! Great Question !

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Can You Finance A Franchise ? Yes You Can !

Canadian franchise financing - When Canadian business owners and entrepreneurs ask us what their financing options are for a Canadian franchise we indicate to them that the options certainly aren’t unlimited, but a number of standard and also creative options do exist.

Naturally all of these options are supplemented by your own savings or investment, what the finance world typically calls ‘owners equity ‘. In the current somewhat difficult challenging environment we have observed that there is upward pressure on the amount of owner equity you need to put into the business yourself.

How to Get A Business Loan For A Franchise with Franchise Financing Lenders

Most franchises in Canada are typically financed via loans, or debt – Canadian franchising does not really lend itself to a venture capital type environment. So where do those loans or debt come from – typically it is from traditional sources such as banks, and our firm has found success in effect cobbling together a couple of different financing sources to ‘ get the job done ‘.

When entrepreneurs come to us for franchise financing them is either looking for one of three scenarios – they are:


Looking to renovate their franchise location
They are wishing to purchase a brand new franchise
They have entered into a purchase agreement to purchase an existing franchise


Each of the above scenarios is worth mentioning with respect to a couple key points and observations:


Renovating an existing franchise via leasehold improvements or new equipment is probably the easiest financing scenario – as we have a real business already on our hands that is hopefully doing well, making some money, and looking to grow / expand
New franchises are probably where most of the financing challenge is as the entrepreneur and his trusted business financing advisor have to sell the lender(s) on the nature of the franchise, the probability of success, the industry business model, etc
Existing franchises are fairly easy to finance as again we have a business with sales, assets, and profits already in place. Some owners we work with target franchises that are existing that might not be doing well, they negotiate a fairly reasonable price, and have the determination that they can ‘turn the franchise around. Sometimes that is not necessarily as easy as it sounds.



One of the most popular methods of financing franchises in Canada is the Govt of Canada guaranteed small business loan . A large majority of franchises are financed in this manner .



Highlights of the Program include :

Eligibility for any franchise with under 5 M or less from an actual or projected point of view.

Loans up to 1 Million $ are available, with a large portion of the loan guaranteed by the government . An appropriate business plan and other key documents supporting the is required to commence the loan process. 7 Park Avenue Financial prepares proper business plans for our clients in the franchise segment.

Loans are used to either purchase the building/land , new equipment, as well as leasehold financing improvements.business.

Repayment terms and rates are very attractive and similar to traditional financing that is available to non franchise businesses.

We can’t over emphasize the fact that the ‘financing’ aspect of the business purchase should be entered into very early on in your whole process. Typically you have selected a franchise, or are entertaining a couple different options. In the last couple years we have been made aware of specialized firms that match your own business traits and style with the type of franchise that would most suit you. Not everyone is cut out to sell donuts and pizza, and we find some owners simply look at the appeal of potential revenues and profits, and not into the issue of ‘does this franchise suit my overall business style, work ethic and skills.

‘Skills ‘– Let’s focus on that for a moment. In our experience owners stand a significantly more better chance of success when they have some industry experience – We are not saying you ‘can’t be successful with no industry experience, but certainly those chances improve, and we hasten to add that issue is one criteria of any lender – i.e. does this business owner have the skills to run this business on a daily basis and grow and profit.

In summary, finalize your franchise purchase and start early on in your process to determine a financing strategy that works and will compliment your skills and investment. Rely on the services of a trusted , credible and experienced Canadian business franchise advisor with a track record of business finance success who will work with you through the entire financing process.




7 Park Acvenue Financial:
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

Best Way To Finance A Franchise ? We've Got Them !

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How To Finance A Franchise

Franchise Financing Options ! You're there. You have made the decision. You're committed. You have timelines now. We're talking about your franchise finance decision and the next challenge you have in the franchise process - financing a franchise. How many ways to finance a franchise are there? Only one... the right way! And we'll show you how.

Steps to a Successful Best Way To Finance A Franchise

The ability to finance your franchise properly and satisfy the requirements of the franchisor without putting you overly in debt is what it’s all about of course. And if you do it right then you of course have the potential to grow a business, profit from it, and build owner equity for either long term resale of personal financial gain. That's simply what it's all about, and boy does it help if you like what you are doing, at the same time taking on the entrepreneurship role in Canadian business.

The good news is that your are lucky, because franchising couldn’t be any hotter or more popular. Franchises move goods and services in the billions in Canada, and you're now part of that movement.

But let’s be realistic, whether it’s a franchise investment of any other business start up the same critical needs apply relative to planning and financing.

Homework. Did you hate it in school? Well here it is again because we strongly suggest to clients that you are now in homework mode when determining how financing a franchise works. It’s all about planning, which includes ensuring you have a profitable potential business on your hands, as well as understanding ways to finance a franchise in Canada.

Business plans are critical to your franchise investment. It's a case of demonstrating your business has both profit potential plus, and this is what interests the lender, that you have the ability to repay your debt and loans. The franchisor naturally is interested in long term success of the chain, and your ability to pay royalties as they become due, usually monthly.

When you address the franchise finance decision you must consider a number of items - they are as follows - what is the total all in cost, what methods are available to finance each part of the cost breakdown, and finally, and perhaps most importantly, how is the actual financing done.

The costs to assess in a franchise finance investment are as follows - the initial franchise fee, the cost of fixed assets or leaseholds to your business - i.e. equipment, signage, vehicles if required, etc. And finally, if you did all that and didn’t address working capital for ongoing operations and growth then you are setting yourself up for failure.

Clients are always looking to us for a magic solution and a one stop finance strategy for their franchise investment. The closest we can come to that is the government BIL/CSBF loan, under which the majority of franchises are financing in Canada. You can successfully augment this strategy by equipment financing for a variety of assets as well as a small working capital loan, usually unsecured. Don't forget also that your own owner equity investment becomes the final piece of the puzzle.

Other ways to finance a franchise include term loans, equipment financing, etc. Bottom line is that the entrepreneur has options . Franchise financing lenders exist, you just have to know how to access them .

And getting back to our business plan, ensure that you have covered off all the debt you need and that if reflects your ability to pay it back.

Financing a franchise. Challenging? Yes, we guess so. Possible? Of course. Speak to a trusted, credible and experienced Canadian business financing advisor with franchise experience and a track record of business financing success who will help you navigate, successfully, the only way to finance your new business - the right way!





7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

Canadian Franchisee Loans and Business Funding - 4 Secrets To Financing A Franchise

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Information on financing a franchise in Canada. Loans and funding tips you can use as a franchisee seeking business funding for your start up business in the franchising industry sector you have chosen

The inside edge. You want it, we have it! Have we got some tips and secrets to share for you.

We're talking about financing your franchise - the successful completion of your entrepreneurial dream in Canada. As a franchisee you want to be aware of your options in loans and funding programs that are geared specifically to financing a start up business in the booming franchise industry.

We're going to discuss 4 key elements of a proven formula for franchise success. What are they? Simply speaking its ensuring you have a business plan that accurately resembles the financial aspects of your business. Number two is the types of emphasis that is put on your own personal background and credit history. Number 3 is the knowledge of franchise financing options in Canada, and number 4, (often # 1 in your mind probably) the amount of personal funds you have to commit or invest to get your business going and your franchisee funding approved.

Let's dig in! OPM. What is it? It's stands for other peoples money and its critical you understand that a franchise is composed of two elements with respect to your financing plan - debt (what your borrow) and equity (what you put in). Our key point here is simply that while there is no proper mix of what works for the combination of those two elements. No franchise is financed with 100% borrowed funds - conversely you don't want to ' pay cash ' for your business and risk all, or a lot of everything you own (house, savings, etc) for a start up business such as a franchise.

We will also share with you that some of the very specialized franchisee loan program in Canada typically require a 30 - 40% owner equity, or down payment. That can be achieved in several different ways.

Should you tap into your retirement plans to fund your franchise? That's not our call, but if you have capital outside your savings we would not recommend collapsing RRSP's, or taking out home mortgages, etc for the purpose of financing and funding your franchise.

Clients often ask how their personal credit history affects their ability to get franchise financing. In general we can say it's a key point in the whole approval process. Many Canadians aren't aware that the entire credit history system in Canada is based on a simple score. You should have a score of at least 650 to be successful in traditional franchise finance. So check your score in advance. And by the way, higher is better!

The business plan is a key element of your whole package. Many clients don't have experience or financial acumen to prepare a proper plan. Not a problem as you can seek a Canadian business financing advisor, or accountant, etc to prepare your plan. A good basic plan comes at a very reasonable cost.


The business plan is your ' total picture 'of your franchise. Basic elements are yourself, your background and business or industry experience, info on your franchise, and some basic financial projections. Naturally the better recognized and successful your brand the more attractive your perceived chances of success are.

As a franchisee what loans and funding is available in Canada. As unbelievable as it may seem the government of Canada, via Industry Canada, is one of the largest players in your franchise success. A program called the BIL / CSBF program is hugely popular and finances mot franchises fewer than 350k in Canada. We strongly recommend you seek out and investigate this program, it's probably the key to 95% our client's success in financing a franchise with funding that comes with great rates, terms and structures and limited guarantees. Bottom line, check it out!

So there you have it, 4 key elements, and secrets if you will, to franchisee financing success. Summarized... a solid business plan, some good business or industry experience coupled with a reasonable personal credit history, a down payment that is aligned to your overall financing needs and personal situation, and, last but not least, knowledge of programs such as the BIL which are geared toward franchise finance success.

So now you know!

P.S. Good luck in your entrepreneurial dream, and going it alone is never good, so seek the services of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success



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.


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop



Article Source: http://EzineArticles.com/6224647

Financing A Franchise In Canada : Qualifications For Franchising Loan Success Explained

Do You Qualify For Franchise Financing In Canada ?

OVERVIEW – Information on financing a franchise in Canada . When it comes to finance qualifications for a franchising loan it’s important to know the criteria and what counts!




Financing a franchise in Canada comes with certain qualification criteria the franchisee must meet. What are these criteria, and what is the best way to overcome any obstacles in borrowing success for the Canadian franchisee entrepreneur? Let's dig in.

Business loans come with qualifiers, and when it comes to a franchising loan there's no difference there. Criteria for qualification and approval are made by specialty franchise lenders, banks, and commercial finance companies which often supplement and compliment a franchise finance package.

Fundamental to any financing proposal is the required reasonable personal credit history of the borrower. But how is this determined? The majority of the times it’s simply based on two fundamental factors - the personal ' net worth ' of the franchisee, and his or her credit rating at credit bureaus. (There are two main credit bureaus in Canada and your score won’t be dramatically different at one of the other). It's a numerical scoring system wherein a score of 650 is in fact the ' magic number ‘.

The net worth statement itself couldn’t be more basic - it’s a financial form that you complete that simply sows assets and liabilities - in simpler language, what you have and what you owe.

In Canada banks do a great job of advertising small business and franchise programs - the general consensus from' the street ' though is that the aggressive advertising is sometimes not reflective of the actual approval possibilities.

We'll leave it at that.









But when it comes to banks in Canada they don't necessarily finance franchises directly ( without a lot of personal collateral backing up the loan ) - they do however have specific programs in place with some of the larger well known franchisors that can fast track an approval . (Think hamburgers/clowns and hockey/donuts)

Where a Canadian chartered bank can do a great job for you (if you're working with the right banker) is under the auspices of INDUSTRY CANADA'S CSBF/BIL program, more commonly called the 'SBL ' loan.
Here's where any franchising loan fewer than 350k that covers assets and leaseholds (not working capital though) can be financed with solid terms - those include good interest rates, low personal guarantee, no repayment penalty, aggressive amortizations.

Other criteria for success in franchising loans include a solid business plan and cash flow projection, information on the background and expertise of the borrower, as well as effective narrative highlighting the current success of the franchisor.

If you are looking to succeed in the franchise industry in Canada financing a franchise properly is key to your success. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your loan needs.




Stan Prokop - 7 Park Avenue Financial :


http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


http://www.7parkavenuefinancial.com/financing-a-franchise-franchising-loan.html






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?


CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Financing A Franchise? Looking For Peak Performance Financing When It Comes To A Franchising Loan In Canada .

Feeling Lost When It Comes To Franchise Financing In Canada ? You Shouldn’t



OVERVIEW – .Information on financing a franchise in Canada . Why are prospective franchisees feeling bewildered about successfully completing the franchising loan process for their new business



Financing a franchise in Canada. Does the Canadian entrepreneur have to necessarily feel ' lost ' when it comes to a franchising loan in Canada? We can understand why, but that doesn't have to be the case. Let's dig in.

Right out of the gate it’s important to know what type of financing you need to look for, and what's available. At the end of the day typically it’s a combination a finance that will include both a term loan and some sort of working capital facility unless you're in an ' all cash ' business, which is often the case in many service and hospitality type franchises.


Question 1 from clients we talk to is the issue of addressing how much they are required to invest in the new business. It goes without saying that your investment is both a must and critical. It shows your commitment to both the franchisor as well as the commercial lender.

Building your equity investment into your initial cash flow forecast is important. It's the combination of owner equity plus financing obtained that allow you to create the all important opening balance sheet and cash flow. This is a document that your bank or commercial finance firm will look at to see how repayment is going to be made.

The franchisee (that’s you!) need not feel lost or bewildered when it comes to preparing the financial part of your application. If you don’t have expertise in this area the basics can easily be prepared for you by an accountant, business financing advisor, and on some occasion’s assistance and input from your franchisor.

Typical franchise term loans are 5-7 years in length. At that time you should typically be in a position to have retired all the debt you've borrowed to buy the business. But don't forget also that along the way you may well be required, or need to, replace assets in your business or generate some level of working capital to cover your cost for inventory, carrying receivables, and normal sale growth scenarios .

Always be prepared to address issues in your financial forecasts. These are sometimes referred to as ' assumptions ‘. We all of course remember the dangers of ' assuming ' things in business. So be prepared to talk about issues around timing of revenues, profits, costs of assets, growth trajectories, etc.

We hate to drag clients ( kicking and screaming ?) into the world of accounting and finance - but clearly understanding how your repayment , breakeven, profits and cash flow and fixed costs work are somewhat key to your overall success . It's never just ' all about sales’.

Remember also that the majority of franchises you will look at purchasing don't require outside collateral from yourself as the owner that even offering that up to the lender won't make sense if your financial forecasts arent reasonable.

We maintain you don’t have to feel lost when it comes to a franchising loan in Canada. That peak performance we have talked about can come about even easier when you seek the services of a trusted, credible and experienced Canadian business financing advisor who can assist you with your franchise financing needs.





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 :

7 PARK AVENUE FINANCIAL = FRANCHISING LOANS IN CANADA






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