The Truth About New Business Loans for Your Franchise Investment

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Information on how Canadian franchisees can finance their franchise investment via new business loans that make sense for the franchise industry. What types of loans are available.

You can't handle the truth! We love that now famous movie line,

but we are pretty sure you can handle the truth about one of your major life decisions, completing a franchise investment via new business loans.

When we talk to clients about their desire to finance a franchise it's clear they recognize that this is a specialized type of finance that and are unclear about how to go about completing the financing they need to both acquire the investment and then run the business for future growth and profits.

Let's cover off some of the basics around the truth behind how many hundreds, perhaps thousands of franchises are financed in Canada each year.

There are 3 or 4, depending on size and type of franchise, lenders that are key to completing your franchise investment. The good news is that you know one of them really well, and have some excellent negotiating strength with that person. That person is actually you! Why? Because one of the components of franchise finance is called the owner equity investment. Your part of the funds that you put in are generally recorded as a shareholder loan, and you become in effect a creditor of the business.

That might sound like accounting mumbo jumbo to most of our clients... the truth they are seeking is even more basic than that - ' how much do we have to put in' is always what their questions comes down to! And the truth on that one is that it depends. We can categorically say that over the last couple years with the credit crunch and other factors that you should be prepared to put down anywhere from 30 - 50% of your investment. That in many ways is a good thing because you are helping to shore up equity as opposed to taking on to much debt. If franchises were able to be financed on 100% debt we can assure you there would be many more business failures because of that same fact. If you business falters or stumbles on revenues or collections cash flow problems could set in.

Clients assume, incorrectly, that banks finance franchises outright. We haven't seen that happen once yet - it may have, we just haven't seen it. So getting back to the truth you are looking for, do banks provide new business loans for franchise finance in Canada? You're going to hate us for being vague but the answer is ' kind of '. The reality is that the banks do in fact provide most of the financing for new franchisees in Canada, but they do it under the auspices of a specialized loan called the BIL/CSBF. This loan is actually underwritten and sponsored by our good friends in Ottawa, the federal government. In the U.S. it's called the SBA program; here we call it often an SBL - i.e. Small Business Loan.

The BIL/CSBF loan is a specialized loan with some basic requirements - many of our clients stumble and falter on their own because they are incapable of presenting a package that contains exactly what the banker and government wants to see. We therefore recommend that you seek the services of a trusted, credible and experienced Canadian business financing advisor who can guide you through that process, successfully.

Other ways to compliment the financing of the franchise are equipment financing and term working capital loans.

So, did you handle the truth? We are pretty sure you did, and focusing on how things are done properly should assist you in the successful financing of your franchise investment.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 13 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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 '

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/expert/Stan_Prokop/432698

Article Source: http://EzineArticles.com/5491685

How to Protect your franchise investment with smart financing options when you buy a franchise

It was, or will be an easy simple decision right? We're talking about the minor issue of your decision to purchase a franchise.

We're just kidding of course, because we know the franchise investment you make when you buy a franchise is one of the larger decisions you'll make in your life. And we clearly recognize the franchise cost of that investment is never a small one. So we are thinking you want to do it right?!

You can protect your franchise purchase by financing it properly. You want to be in a position to satisfy yourself, and your lender that you have the right amount of debt (I.E. loans, etc) and equity into your transaction.

It seems that it’s always about the money, and that was probably one of the concerns you had when you made the decision to purchase a business via the franchise industry. You recognized it was a potentially great way to build wealth and equity, but wondered where start up capital would come from.

The reality is that start up capital for your franchise investment comes from two sources, yourself, and one or two other lenders who specialize in franchise financing. Actually a large majority of franchises in Canada are financed under a government program that is technically called the BIL/CSBF program. Bar none it is the best financing deal in Canada for any new business, and franchisees have flocked to it for years. More about that program and how you can achieve success via it later...

We can’t over emphasize that one of the key factors for franchise approval, under our above noted program, and others is simply that you require a decent personal credit history. Without getting to technical we can simply say that means that you have historically paid your bills, not been bankrupt, and aren't over borrowing in your personal life. Enough said about that. When we meet with clients looking for franchise financing this is one of the first areas that we (delicately!) explore.

But clients want to know why this is such a key factor, and its simply because the reality is that a franchise is , no matter how you look at it, a small business start up, and lenders look at how you run your personal life as a mirror as to how you will run your business .

Planning - that’s the keys secret in financing a franchise investment you are going to make and ensuring the franchise cost of that decision is properly financed. You do this in a variety of ways, one of which is documenting your purchase and plans via a properly prepared business plan. This document should highlight yourself, your business experience, and show the financial fundamentals of your business, i.e. Cash flow, ability to repay your loans, what the opening balance sheet will look like, etc.

We clearly realize that not all our clients have the financials skills, background and ability to prepare such a document, let alone present it. That’s why it’s a good reason to consult a Canadian business financing advisor or expert who is credible, experienced and trustworthy and an expert in franchise finance in Canada.

We also remind you that step one when you buy a franchise is financing it - step 2 is making sure that you have a plan around how you will grow your business while having enough working capital to run it.

In Canada franchise cost is financed via the Government BIL program we noted - The borrowing limit is 350k, and we have found that this financing can be supplemented with equipment and lease financing for certain assets of the business . Those two strategies, coupled with your own investment of funds will get you to the goal line.

Speak to that ' in the know' advisor we talked about and you should not have any worries in your ability to finance and buy a franchise.

--

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 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

The Truth About New Business Loans for Your Franchise Investment

You can't handle the truth! We love that now famous movie line, but we are pretty sure you can handle the truth about one of your major life decisions, completing a franchise investment via new business loans.

When we talk to clients about their desire to finance a franchise it's clear they recognize that this is a specialized type of finance that and are unclear about how to go about completing the financing they need to both acquire the investment and then run the business for future growth and profits .

Let's cover off some of the basics around the truth behind how many hundreds, perhaps thousands of franchises are financed in Canada each year.

There are 3 or 4, depending on size and type of franchise, lenders that are key to completing your franchise investment. The good news is that you know one of them really well, and have some excellent negotiating strength with that person. That person is actually you! Why? Because one of the components of franchise finance is called the owner equity investment. Your part of the funds that you put in are generally recorded as a shareholder loan, and you become in effect a creditor of the business.

That might sound like accounting mumbo jumbo to most of our clients... the truth they are seeking is even more basic than that - ' how much do we have to put in' is always what their questions comes down to! And the truth on that one is that it depends. We can categorically say that over the last couple years with the credit crunch and other factors that you should be prepared to put down anywhere from 30 - 50% of your investment . That in many ways is a good thing because you are helping to shore up equity as opposed to taking on to much debt. If franchises were able to be financed on 100% debt we can assure you there would be many more business failures because of that same fact. If you business falters or stumbles on revenues or collections cash flow problems could set in.

Clients assume, incorrectly, that banks finance franchises outright. We haven’t seen that happen once yet - it may have, we just haven’t seen it. So getting back to the truth you are looking for, do banks provide new business loans for franchise finance in Canada? You're going to hate us for being vague but the answer is ' kind of ‘. The reality is that the banks do in fact provide most of the financing for new franchisees in Canada, but they do it under the auspices of a specialized loan called the BIL/CSBF. This loan is actually underwritten and sponsored by our good friends in Ottawa, the federal government. In the U.S. it’s called the SBA program; here we call it often an SBL - i.e. Small Business Loan.

The BIL/CSBF loan is a specialized loan with some basic requirements - many of our clients stumble and falter on their own because they are incapable of presenting a package that contains exactly what the banker and government wants to see. We therefore recommend that you seek the services of a trusted, credible and experienced Canadian business financing advisor who can guide you through that process, successfully.

Other ways to compliment the financing of the franchise are equipment financing and term working capital loans

So, did you handle the truth? We are pretty sure you did, and focusing on how things are done properly should assist you in the successful financing of your franchise investment.
--
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 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


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