Franchise Funding Options Not A Cinch? Franchising Loans May Not Be As Tough To Get As You Thought

This Is What Happens When You’ve Got The Right Information on Franchisee Finance Options


OVERVIEW – . Information on franchising loans in Canada. How does the entrepreneur know he or she has access to the right franchise funding options that are available in the Canadian marketplace




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 simple the ' newbie - a first time franchisee that’s looking to funding for the entrepreneurial dream of owning your own business. In other cases you might actually already own a franchise and want to expand.

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.

Key to understanding the financing challenge is the recognition that you as the business owner must have a financial commitment in 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.

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!


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 numerous avenues of assistance are available.

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 inlcude equipment lessors and working capital specialists.

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!

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 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 certain cases you might be looking at the concept of ' refranchising ‘, namely buying from an existing franchisee in your chose franchisors network. There some solid reasons to look at this method of entering franchising:

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'!


So, bottom line? 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.



7 PARK AVENUE FINANCIAL = FRANCHISE FUNDING OPTIONS


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 :


http://www.7parkavenuefinancial.com/franchising-loans-franchise-funding-options-2.html





CONTACT:
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

Romancing The Loan – Franchise Funding Options in Canada - Franchisee Financing

Romancing the Loan. Sounds a bit exotic, does it not? But after the euphoria and celebration of making a decision to purchase a franchise is over, what next? We can tell you. You start worrying about franchise funding options and how a franchising financing loan will happen.

Don't despair though... we're going to cover off some real world and common sense solutions to franchise finance in Canada.
So where do you turn to after you realize you need assistance in financing your new business? While the logical decision is to think of ' the bank ' there are some key things you need to know.

In our experience getting a direct loan from a Canadian chartered bank to finance your franchise is generally unlikely. But, if the truth were to be told, (and we're telling it to you here) there is a way to get a Canadian chartered bank ' on side ' with what you want to achieve. But you need a guys help, and that guy is Bill. Bill who? We're actually referring to BIL, (that’s one L folks), which is a specialized government loan program that the banks use to fund most franchises in Canada.

So the simple explanation for our purposes is simply that while the folks at Industry Canada in Ottawa guarantee and organize the program parameters, they in fact charter the banks to administer the program on a daily basis. And the beneficiary that program is you, the new franchisee!

Are there some key factors that will allow you to immediately determine if you can successfully access this program? There sure are. One is of course you r ability to demonstrate you have a clean personal credit history. This is done by simply checking your credit bureau report and being able to produce your tax returns if and when required. (The government for whatever reason likes to know you are paying and filing taxes!) If they are going to give you a loan. Makes sense though.

Clients are always asking if the type of business they purchase when looking for franchise funding options makes a difference. In our opinion, generally no, it does not. With a couple comments though, in that of course a recognized brand is better than an unrecognized brand (think McDonalds as opposed to Joes Burger Joint). And in our experience a service non asset type of business is a bit more challenging to finance that a bricks and mortars franchise requiring financing for equipment, leasehold improvements, etc.

When you consider a franchising loan for the purposes of financing your business remember that any business in Canada is financed in two parts, one part debt, and other part owner equity. So be prepared to put a ' reasonable ' amount of funds down as your personal commitment to the business.

What's that? You have a question. We know your questions and also we've got your answer. An immediate client question almost all the time is ' so how much do we have to put into the business '. The answer is a bit general but anywhere from 10- 40% might be expected, it really varies, and there are some creative ways in which your owner equity or deposit can be validated.
Two considerations you should always make when looking at a personal life commitment such as purchasing as business is how much you should risk, and how you will access personal funds.

The great news about risk is that our aforementioned government BIL loan only requires a nominal 25% guarantee from you the owner. That low of a guarantee is generally unheard of in other forms of Canadian business financing. Also, as a second point, we don’t necessarily recommend you collapse secured savings such as RRSP's given the tax hit you will take with that strategy.

Other options in franchise funding in Canada involve specialized equipment financing and working capital loans, and even the ability access highly specialized franchise finance firms that only do this type of financing, but not on our govt program that we have highlighted.

Bottom line? You do have franchise funding options in sourcing capital for your entrepreneurial dream. Loan financing is available in a number of creative ways. Speak to a trusted, credible and experienced Canadian business financing advisor - get on the right track today re: romancing the loan!





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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/franchise_funding_options_loan_financing.html