Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!

Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!


Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!



Restaurant financing in Canada. If it's your choice to enter the hospitality industry lets examine how you can increase your chances of success, from business plan to that most important element... Approval!

Quite frankly we can' think of any industry that seems to be growing more quickly, and we're of course talking about both franchise restaurants as well as independents , both of whom seem to have a solid chance of success these days.

It's not ours to judge or offer up why this industry is growing so quickly or is so popular, - reasons in fact might be that we ' seem ' to be out of a recession ( key word = seem!), the economy is getting better, and those restaurants that didn’t make it now seem ripe for the pickings vis a vis locations, etc.

Pricing is of course critical in your overall strategy. While prices of franchise restaurants are of course fixed relative to franchise cost and turnkey cost to build many non franchise restaurants can be purchased for a great price - sometimes it’s just the cost of assuming the lease from a co operative landlord.

That of course brings into play the question of equity - just how much do you need to put together a proper financing, i.e. the classic mix of debt and equity ... more simply put ... a combination of borrowed money and your own money. In Canada that seems to range from anywhere from 10 - 50 per cent. depending on a number of factors which we will discuss.

One of the most popular methods of financing a hospitality venture is utilizing the Canada BIL/CSBF loan program. While it requires a 10 per cent permanent equity injection you must be in a position to demonstrate additional access to working capital, which just makes sense as your venture ramps up on sales and working capital needs.

It is also important to demonstrate that you have some industry experience, as that seems to be a key factor in the ' KEYS TO SUCESS ' column for this industry.

It all starts with a solid business plan of course - we tell clients not to worry if they don't feel they can complete a proper plan, as that assistance can come from a Canadian business financing advisor, their accountant, or any other qualified part. And these plans have a relatively speaking nominal cost relative to the risk and important you place on getting your venture financed properly.

Key elements of the business plan are your own bio, industry info, financial projections, and an overview of your business model, whether its franchise or independent, and some info on the local competition. It's really as simple as that. Demonstrating how you will run and grow the business is also important.

Typical restaurant financing includes the finance of equipment, leaseholds, working capital, and in some cases real estate. That brings up the point of lease negotiations, which must be completed prior to your financing ... for some reason lenders like to know you have a location!!!

The double edged sword of the hospitality industry is risk and reward, the ability to be your own master.

What you don’t want to do is to be part of the falling wounded when it comes to restaurant finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your needs.

7 PARK AVENUE FINANCIAL
CANADIAN RESTAURANT FINANCE EXPERTISE





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/restaurant_financing_business_plan_finance_canada.html

Restaurant Financing In Canada - Your Hospitality Loan Finance Primer . Now You Know How!

How To Address The Financing Of A Restaurant In Canada

Information on restaurant financing in Canada . Putting the right hospitality loan in place might not be as difficult a finance challenge as you think !

Restaurant financing in Canada. Let's talk about some common sense financial approaches to getting the right hospitality loan finance in place for your chosen restaurant business. Oh, and by the way, that might be a franchise business, or it might be your own unique concept; there are advantages to both.

We use the term ' financial approach ‘. We can almost see our clients grimace when we use the term as it conjures up things like accounting, financial statements, etc. The reality is though that many entrepreneurs we meet in the hospitality industry are running on a bit too much emotion and ego and a need a little more of a financial approach to simple basics around a restaurant such as cash flow, profits, return on investment, etc.

It's really the cash flow potential of a restaurant that will determine a common sense price for you, and down the road that same metric will be a key driver in the valuation when you want to sell the business .

Getting a solid handle on the cash flow around your business allows you to be successful in several areas. Those areas include refinancing, selling your businesses, and, as we said determining if your initial investment in the business is reasonable when it comes to total return to yourself. That total return is usually viewed by the entrepreneur in two ways, the salary that he or she can take from the business, as well as the equity that the restaurant is hopefully building up in terms of valuation.

Quite frankly getting a good handle on the cash flow of the restaurant, independent or franchise... allows you to make a proper choice when it comes down to several businesses that you might be looking at .

When a lender, or yourself looks at the financial projection, or the actual financials of the restaurant they are looking to get a sense around normalizing the cash flows, as many restaurant owners take out a salary that might be higher, or lower, than the industry norm.

Be carefull in your projections, or analysis of an existing restaurant that items such as personal vehicles, salaries to family members, and advances to owner’s dont distort the true profit and loss of the business.

The ability to service lease and loan debt is critical in restaurant financing. Real care must be taken to ensure you are capturing all the debt of the business and that you feel comfortable with the overall cash flow.

The amount you are required to finance a restaurant in Canada varies, and typically it’s anywhere from 10-50% from a viewpoint of owner equity.

Due to the higher risk surrounding perceptions of hospitality loan finance care must be taken to source the proper financing. Typical financing programs that best suit Canadian restaurant finance are the SBL Government business loan, aka the 'CSBF' loan, as well as lease and equpment financing that can be easily accomplished via an independent lease finance firm.

Typical payback scenarios are 3-5 years, sometimes longer, depending on the size of the business and the loan. Leaseholds are best financed under our aforementioned SBL program.

Take a practical, not an emotional approach to your restaurant financing challenge - it will pay off in the long run. For specialized assistance speak to a trusted, credible and experienced Canadian business financing advisor for your hospitality loan finance 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 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/restaurant_financing_finance_hospitality_loan.html