Going It Alone In Canadian Franchise Loan Financing ? Business Franchising Loans

Don’t listen to them. Many will of course tell you it might be dangerous to ' go it alone ' when you are looking for franchising financing loans.

Can you actually get a business franchise loan without any outside help? Its certainly , possible , and we'll share some advice, tips, strategies and info around your potential do it yourself strategy - but we'll also demonstrate why some professional assistance along the way will ensure the success you are looking for in your franchise business acquisition .

There are of course some real potential pitfalls along the way on your road to franchising success. You want to be sure of course, to the extent that you can be, that your business will be profitable. But all business is of course a risk, whether it’s General Motors or your vision of your own service or restaurant business as an example. It is critical to make the most of the opportunities you have to examine profit potential. Those profits by the way are of course what pay back those franchise finance loans!

Along the way on your franchise journey you have numerous methods of determining financial success. A good start is looking closely at your franchisors prospectus and information, - even though that info might be for ' average ‘ franchisees it gives you a good sense of profit potential versus risk .

Don’t forget of course that your risk is that you are no only borrowing funds for the franchise but that your own personal equity injection into the business is a key part of the overall franchise financing package you will eventually come up with . So work to minimize the risk of franchise business failure.

Get your costs in order and understood. That’s some of the best advice we can provide. We advise clients to look at the total picture, which includes soft costs and hard costs, some of which can be financed, not all. Typically we recommend your owner equity be used to cover those ' soft costs' such as the franchise fee, etc.

Try also to match revenues with expenses - it might make perfect sense to lease some of those ' hard assets ' in the franchise to match the economic benefits you will receive from those assets with the useful economic life of the asset. Want a simple explanation of that? Example: If you're starting a restaurant and a large fridge or cooler is, say 75,000.00 doesn’t it make sense to finance that at say 2k per month on a lease as opposed to using valuable equity and working capital and paying cash. We think so. Wouldn’t you?

So how are franchises actually financing in Canada. We focus on a total package that might include a franchise term loan, a working capital loan, and the appropriate amount of external financing through a financial vehicle such as an equipment lease. Here's the big surprise in Canadian franchise loan financing - simply that the majority of franchises are financed with the government loan program called the BIL / CSBF program. By the way, it has incredible rates, terms, structures, and a limited personal guarantee. What more could you ask for.

So, in summary, is it possible to go it alone in Canadian business franchising financing? It is, but a better solution might be to work with a trusted, credible and experienced Canadian business finance advisor who will craft your package according to financial available and your particular situation and needs. Going it alone, but with a suitable partner when needed is a good thing sometimes!



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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

The Secret Ingredients In Canadian Franchise Loan Finance - Making Loans For Franchise Work

Ingredients - The dictionary defines that word as elements required for a plan. No, we're not baking a cake here, we're going to instead define some key ingredients for a franchise loan in Canada - Your ability to successfully arrange and get approved for franchise loans for your new business is of course one key to your future success .

We noted a ' plan ‘, as referenced above. We're the first to admit that franchising is as hot and popular as every, so there is sufficient proof out there you can succeed - thousands of franchisees all over Canada and the U.S. have taken the plunge and have become entrepreneurial successes.

But is it possible to fail? Unfortunately yes... and even if you have a plan but have a poor franchise loan finance strategy in place for your business, coupled with your inability to fit the mold for your franchisors plan... well you know the rest. Those are some of the ' soft areas ' of potential failure, i.e. things like people skills, ability to manage a business, or simply not keeping to your franchisors formula... those are all ingredients for failure .

But our ingredients are today focusing on the hard factors getting loans for franchise finance in Canada.

Two of the most important ingredients to your success are your ability to make a reasonable equity investment into your new business, so that you are both not burdened with debt, but at the same time meet the criteria for specialized franchise loan programs that exist in Canada.

While one or two firms in Canada specialize in large multi million dollar loans for well known larger business blue chip type franchises the majority of clients we meet tend to be looking at a restaurant or service type franchise that typically comes in at the 200- 400k range.

So what key ingredients are part of the recipe for franchise financing success. They are, in our opinion, as follows - maximizing your ability to qualify for special franchise loan scenarios as offered by Industry Canada's BIL / CSBF program. This program alone finances most of the franchises in Canada and can help you turn your dream and passion for a franchise purchase into reality.

We're going to assume you have thoroughly researched your business and you've got what it takes, include some experience or relevant management background for the industry. What else is required for the financing plan?

Some of those key ingredients are a business plan, prepared by yourself or a professional, and by the way ... a few words about that plan. It doesn’t have to be 100 pages. It should be a clean simple document highlighting yourself, your franchisor, the industry, and most importantly, take some time to make sure the numbers work. Make cash flow assumptions that are reasonable; and by the way, don't forget to show the lender how they are going to get paid back for the franchise loan,

The majority of loans for franchise in Canada do fall under the BIl loan program we mentioned. It has great rates, terms and structures considering you are in effect a start up business.

Have we forgotten any other secret ingredients? Perhaps one, which is your own credit history. Franchisees with a decent personal credit history have a much greater chance of success. Yes, you might have a good down payment and some solid collateral or assets in the business, but that personal credit history dictates how you run your personal financial life, which transcends clearly into your new franchise business.

Focus on all these key ingredients when you are getting down to applying for a loan for a franchise. To ensure maximum success you might want to lay out a simply basic plan of action with a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring those ingredients translate into a perfect recipe - franchise finance approval!

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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