Canadian Franchise Finance
Information on franchise loans in Canada . How do franchisees realistically approach the franchising cost of financing their entrepreneurial purchase .
Franchise Loans in Canada. At 0% financing? Financing franchising cost at that rate would be great? Hardly realistic, right? And we won't even weigh in on why the police would even consider arresting a great superhero such as Batman who protects the city from evil.
So if those two things don't exist, what is in fact the real scoop on franchisee finance in Canada? Let's examine some more realistic issues around the purchase of your business, either existing, or new, in the franchise industry.
A common misconception exists that potentially you might be able to in fact finance 100% of your purchase via some sort of loan vehicle. Unless you've got some special relationship with a lender in Canada that we're not aware of that’s clearly not going to happen.
Typically anywhere from 10-40% of a final purchase price has to be financed by you the owner. And while all of these funds might not necessarily be a permanent investment, they are still needed to demonstrate some working capital conditions that must be met by traditional financial loan criteria. The financial term for this is of course the proverbial ' skin in the game '!
Can you purchase a franchise without a solid personal credit rating and net worth? The short answer, in general, is ' NO '. Whether you're financing franchise cost of purchasing any other business in another industry the reality is that a solid emphasis is based on the way you have managed your personal financial life which lenders use as a barometer as to how you'll manage your business affairs . So credit score, beware!
Is collateral required when financing a franchise? A general comment we can make is that it is not. Typically external collateral is not really a part of any franchise finance decision. Many clients we speak to feel they might have to put their home at risk, and we can commiserate with that thought, but if your franchise is ' PROPERLY ' financed then typically just your owner equity component is required.
Can you get away with getting approved for franchise loans without a business plan? We certainly say ' no you can't ' to that one, and in fact if you're smart the business plan will be a great measurement stick for how you understand the financials around your business, and a great way to ensure you reach some of those sales, cash flow, and profit metrics down the road ,
A business plan should not be as daunting a task as you might think just because you might not have experience in this area. Essentially it's a recap of your business experience, the franchisor and industry you're going to participate in, as well as a financial plan around sales, profits and cash flow and loan repayment. Not that difficult, right?
So, superhero arrests by the cops? 0% non subsidized financing? Doubtful. But if you want to get some realistic financing advice around franchise loans and franchising cost financing in Canada speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your entrepreneurial purchase.
7 Park Avenue Financial is an Expert in Canadian Franchising Cost Financing
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 . 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/franchise_loans_franchising_cost_financing.html
