Ten Things Mom Didn’t Tell You About Financing Options For A Canadian Franchise Business Loan

Demystifying Franchise Finance in Canada


Information on financing options for a Canadian franchise business loan . Debunking popular myths in franchise finance and focusing on how to successfully complete your acquisition of a new or existing franchise opportunity .


If there is one business segment that is not ‘out of favor ' these days its the franchise industry ... not the least of which reason is that a huge per centage of the Canadian economy depends on sales from this entire industry .

Clients have very similar questions when it comes to a franchise business loan, revolving around their need to realize the entrepreneurial dream with financing options that make sense for their particular situation.

We thought we would cover off ten of the most popular questions/issues around franchise business loan financing options, many of which stem from mis - information they have received or simply their desire to get some solid answers to fundamental questions.

So here we go! How long does the financing process take? Typically we advise clients that they should be assessing their financial options in tandem with their progress on selecting and formulating their final decision around which franchise to purchase. We see many instances where a client has lost a lease or location because they were not able to commit to financing approval. In many franchise segments the proverbial three things reign supreme - location, location, and... you guessed it... location!

Is there a lot of ' red tape' when it comes to exploring financing options for franchising? Our answer to that simply is that a franchise is a business and you should understand that the key issues revolving around the purchase of any business - i.e. due diligence, a business plan, a financial plan, miscellaneous costs, etc are all in place in franchising.

If we are turned down elsewhere can financing approval be still obtained. Absolutely... positively, it’s a case of seeking the best alternative that fits your total purchase price and owner investment into the business... ie your equity contribution.

Can both small and large franchises be financed? One or two specialized commercial finance firms dominate the major franchise market when it comes to large cap franchise investments. These transactions can be in the millions, and often involve real estate. However thousands of franchises are financed everyday in the 50-500k range.

What are franchise loan funds used for? In the mainstream of financing for franchises the finance covers equipment assets, leasehold improvements, and in some cases working capital. Many soft costs, such as your franchise fee typically can’t be financed.

How much can we borrow? Boy do we get that one a lot. The BIL program which covers a majority of franchise financing options does max out at 350k... other complimentary financing such as working capital term loans, merchant financing, and equipment leasing can provide top up financing.

What are my requirements to get approved for a franchise loan? Two key requirements are a reasonable personal equity investment into your new business, as well as a reasonable credit history and business track record in your new or related industry.

Can franchise financing be arranged on an existing franchise? Absolutely, positively... that’s a yes! A different strategy is involved, as we are now looking at an existing business with financials, assets, cash flow record, etc. But re -sales can be financed!

Can real estate be financed with a franchise acquisition? Our answer to this one is simply that normal real estate financing guidelines apply, so whether you are purchasing a mfg. company of a restaurant franchise the real estate component would typically be financed separately through a holding company you might set up.

Does franchise financing cover the construction costs of my new business? Yes, that is exactly what many programs are used for.

That covers a lot of the basics. Carefully planning via a business plan and financial projections are key. In any business expert advice gets you to the goal line faster. Seek and speak to a trusted, credible and experienced Canadian business financing advisor who can help you get to ' the dotted line!’



Stan Prokop is founder 7 Park Avenue Financial ;


see http://www.7parkavenuefinancial.com

Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 7 year old firm has completed in excess of 80 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:


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

Suffering From Bank Lines of Credit Amnesia ? Canadian ABL Asset Finance Business Lines Facilities Could Be Your Cure !

Are You Bold Enough To Consider The Newest Type of Canadian Business Financing?


Information on ABL asset finance revolving credit facilities in Canada . Business bank lines of credit without the bank ? ! Why this method of asset finance revolving credit will work for your firm .


It's probably just us, but we recently pondered the fact that many clients we meet are suffering from what might be called ' selective amnesia ‘... a ' loss of inter-related memories ' . It appears to be in conjunction with forgetting what is was like to have business bank lines of credit. Have they disappeared? Weren’t they relatively easy to get? Didn’t they always cover off all the working capital you needed?

Today ours is not to debate, defend or promote Canadian chartered bank lines (by the way, we love Canadian banks) but instead to ensure Canadian business owners and financial managers understand a very solid...we repeat ' solid ' alternative, namely ABL asset finance lines of credit.

Asset finance lenders in Canada provide lines of credit to Canadian businesses of all size. In truth we would say that the more assets your firm has the larger the facility is available and somewhat easier to get, but companies of all size, including start ups by the way, are immediately eligible.

In many cases asset based line of credit facilities either replace bank financing or are a first source of working capital lines for Canadian business. We can't over emphasize the fact that even companies in bankruptcy, receivership, or who are in the unfortunate position of being in ' special loans ( we know ... it’s not that special!)are always eligible for ABL asset finance facilities.

We also point out to clients that just because ABL facilities consider firms that are in some way troubled or challenged that they should never always be viewed as the ' lender of last resort' financing . How can we prove this to you? Simply by advising you that many of the largest corporations in Canada are financed by this bank alternative, and companies who utilize asset based lines of credit because they have been punished elsewhere for ' hyper growth ' often find themselves solicited by banks again for their commercial credit lines. Go figure!

So yes, your firm does qualify for working capital ABL asset finance lines of credit if you have financial losses, shareholder equity issues, CRA arrears, etc, it's just that the facility will be structured a bit differently in terms of rate and structure.

Clients often ask about pricing on asset based credit lines... its a difficult question for us to answer because depending on the type and size and quality of your a/r and inventory and your overall general financial health our ABL financing alternative is priced better than, equal to, or substantially higher .It would seem we have covered off all the bases!

Bottom line on ABL financing... it works, it’s an accepted alternative and if you find yourself suffering form that ' selective amnesia ' on the ' old days ' of business banking then barrel in to the new kid on the block. Speak to a trusted, credible, and experienced Canadian business financing advisor who can assist you in identifying the benefits of this great working capital facility.



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/business_bank_lines_of_credit_abl_asset_finance.html

Financing Working Capital For Business – Canadian Business Cash Flow Alternatives

Management and Sourcing of Working Capital Finance For Canadian Business Owners

Information on working capital for financing and what alternatives business owners and financial managers in Canada can seek and utilize . Management of business cash flow and monetizing current assets should be a owner/manager priority .






Looking for some facts and ' real world ' information on working capital for financing purposes in Canada? Business cash flow is at the center of your firms day to day operations, here’s some great ideas for Canadian financing; let's unlock some of those secrets your competitors are using... and give you some vital insights into business financing success.

You may or may not be in a liquidity crisis - we're pretty sure though that you would prefer to avoid one! Naturally that sort of ' crisis' or just plain challenge revolves around how you have chosen to finance your firm from an operational point of view. So yes, it’s all about (unfortunately) ratios and balance sheet structures, which you in many cases have chosen not to deal with. So let’s determine how you can get some cash flow predictability into your business.

So how do you go about addressing business cash flow? It’s more simple than you thing, you have to accelerate business receivables, control your cash outflows, and address those balance sheet issues we referenced above. It absolutely does not mean you have to take on additional debt, if in fact that is even possible in some cases. There are numerous ways to monetize your balance sheet. We have always gotten somewhat of a ‘kick ' out of the standard metric that banks and other financial lending institutions use to measure your business ' cash flow '.

The reality is that there are tens of different meanings and interpretations to cash flow (don’t panic, we're not going to cover them off today!) but the one 99% of people gravitate to is the ' current ratio ‘. It's the simple calc that takes your current assets over current liabilities and gives you a ratio (we call them relationships). We're told bigger is better in this calc, and that a 2:1 final number is preferred.

But... guess what? If your inventories aren’t moving and receivables are slow to collect and perhaps even over 90 days is that number relevant anymore. The most effective way to measure cash flow is really ' operating cash flow ' - it tracks business cash based on the changes in working capital accounts. For example, if your sales are going up and receivable levels went down then you are generating that positive operating cash flow we just spoke of.

We can assure you we have learned by now that clients don’t visit us looking for classroom lectures on ratios, and debates on what measurements lenders use or don’t use ineffectively. What they do want is ways to liquidate or monetize those current assets.

In Canada you have numerous alternatives to working capital financing. These include traditional bank lines, receivable financing, asset based lines of credit that are non bank in nature, and the monetization of any tax credits such as a SRED credit. (Yes, Sred credits can be cash flowed today!).

So is there a bottom line..?? if there is it’s simply that you can improve your working capital yourself by accelerating A/R and inventory turn overs, creating a sale leaseback on assets owned, or, even consider a permanent working capital injection via a term loan.

Or, as we have stated, consider re monetizing your balance sheet today in the 4 methods we've noted above. Want assistance in whats right for your firm. Speak to an expert Canadian business financing advisor who is experienced, trustworthy and credible. Don't underestimate the need to address these issues today.




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/business_cash_working_capital_for_financing.html

Looking For Canadian Business Financing & Lending - Commercial Finance Company Options

Facts and Resources for Canadian Business Financing Options

Information on why business financing in Canada involves the proper selection of a commercial finance company for refinements to your current business finance strategy .



In Canada business owners and financial managers have an assortment of specialized finance companies that provide a broad level of financing products, all of them different in nature, so let’s examine why a certain commercial financing company might be your best logical choice for financing your business needs.

The good news is that Canada has hundreds of different and specialized financing sources... in fact we think quite often that our clients main challenge is simply identifying who those sources are and matching their finance offerings to their own specific needs . Some organizations are actually very significant entities and offer a broader subset of business financing less than one roof.

In order to determine the right commercial finance firm it is essential to think senior, or junior. What do we mean by that? Simply that if you are entertaining a senior debt facility it must be recognized by the business owner that that lender requires an overall first security position on the asset or assets being financed . Canadian banks do that well by an all encompassing document known as a General Security Agreement.

In many cases you the business owner aren’t seeking term debt, but an operating credit line. That type of facility in Canada is available from a Canadian chartered bank, but more and more corporations are going against the grain so to speak and seeking out an Asset Based Line (ABL) of Credit that allows them to draw on current assets with numerous other flexibilities.

Numerous boutique commercial loan firms in Canada provide temporary ' bridge ' loans... you guessed it , they are a ' bridge ' to a future re financing of certain assets .

In the U.S. there is a huge industry revolving around what is known as 2nd lien debt... simply speaking a second charge behind the first charge of any asset? This type of financing in Canada is somewhat rare, if not available at all.

There are some great hybrid vehicles... and we're not talking cars here! These hybrid business financing offers take on a senior debt position, at the same time structuring some equity participation for the lender. Talk about a lender that motivated to help your firm! We hasten to add also that these types of arrangements can also be facilitated with privately controlled companies, not public entities as might be assumed.

Leasing companies in Canada are highly specialized asset lenders that finance every type of asset imaginable, even patents and technologies n some cases. Many firms take the leasing industry scenario one step further, and finance assets a sale leaseback basis, providing additional cash flow to existing owned assets.

A somewhat robust VC and Private Equity industry also exists in the Canadian business financing landscape. They facilitate growth, re financing, going private, going public and very specialized scenarios.

Numerous firms in Canada utilize merchant banks - these again are specialized firms that bring capital into your business, along with their own. They are compensated in the form of fees, and of course equity ownership with respect to any direct investment in your firm.

Bottom line. Pretty clear we think. If you are looking for a commercial finance company you've got numerous choices, they might be debt, equity, or hybrid financings. Business financing made simple, if you've got some expert guidance in place that places your needs and your own particular situation at the top of the priority list!
Seek and speak to a trusted, credible and experienced Canadian business financing advisor when looking for a commercial finance company in Canada.



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/commercial_finance_company_financing_business.html

Have Questions On Leasing Finance and Equipment Financing In Canada ? Common Sense Approach To Asset Lenders

Work Through The Lease Finance Process With New Confidence


What questions and issues should owners be asking or facing when it comes to leasing finance in the Canadian marketplace . What key issues in equipment financing should business owners address when it comes to working with asset lenders for structures that work for your firm .




In a perfect world, ( know it's.. not! .. but ..) your ability to successfully structure business financing is critical to your firms survival. Let's ensure you've got a solid handle on leasing financing when you're entertaining equipment financing as a strategy for success. And in the process we'll ensure you've got a solid handle on asset lenders in Canada.

The long term goal is to make equipment financing make sense. That of course means ensuring you have a reasonable level of pricing on your transactions, and, most importantly, that the proposition put forth by asset lenders in Canada makes sense... for your firm! So it’s therefore about asking the right questions and following up on those to make good business financing decisions.

Common sense dictates you want to talk to asset lenders based upon your final choice of an asset that will add value... and profit to your business. You will find yourself going through a three pronged stage of negotiations and fact finding (for you and the lessor)... on then to approval and commitments by both parties, and finally documentation and funding. Seems simple right, so where then do things go wrong?

Your firm makes a stronger case for leasing finance when the asset you have chosen allows you to grow your business and generate additional cash flow. But at the same time you should also be thinking of the term of the transaction, i.e. how long will this asset last. In a perfect world you want to try and best match the useful life of the asset to the term of the lease. In initial discussions with asset lenders ensure they understand the assets value in your overall growth and future plans... that’s important.

Choosing the asset is half the battle, ensuring you can pay for it is of course the other half. That's why some basic cash flow analysis and payment budgeting should be critical at this point in your finance decision. A simple financial calculator can calculate estimated lease payments in seconds. Although we're still at the beginning of the transaction give careful thought to what will happen to the asset at the end of the lease - for example, do you want to use it, return it, re finance it for an extended period of time, etc...

We've spoken recently on ' the box ' in leasing. What's the box? asks our clients. It’s the proverbial credit box - that cage that lessors try and put you in to ensure you perfect fit into the box modules - deal size, asset type, your credit quality, pricing re interest rate they will charge... etc.

We've seen clients spend countless hours, days, weeks, even months! muddling their way through the boxes. This where some common sense information on what type of equipment financing company most suits your firm is worth a lot .. in terms of time and money. Your ability to present the asset, your credit quality, and your long term viability when it comes to making payments is critical at this point.

Experts. You can’t be expected of course to know the substantial and fragmented nature of leasing financing in Canada. Who are the asset lenders, which one suits your perfectly, and are you working with the right firm if you have had financial challenges in the past that will be convincingly solved in the future.

We continue to believe the common sense approach to working with an expert in any area of your business makes sense .Speak to a trusted, credible and experienced Canadian business financing advisor to ensure you have the questions, and the right answers! in place for Canadian asset lenders. Allow the power of leasing finance to help you over achieve on your business finance goals.





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/leasing_finance_equipment_financing_asset_lenders.html

What To Consider When Funding Your Company Via Accounts Receivable Financing As An Alternative

Use A/R Finance For business Capital – After You’ve Read This!

Information on accounts receivable financing in Canada . When funding your company with business capital via a/r finance consider these key issues .


So, you're almost there. After evaluating a number of both traditional and alternative business financing and capital cash flow alternatives you've chosen a non bank accounts receivable financing strategy as your new form of company funding.

So far so good. Right? But let's get you some expert help, guidance and tips around selecting the right strategy for your new financing. We'll focus on some key issues that traditionally in our experience have made it hard for client to both understand and be successful with this form of working capital financing.

First things first, so lets cover off a very basic question - which is simply ' how does the facility work on a daily basis?’ You need to understand that the amount you can borrow in A/R financing revolves solely around your ' eligible ‘receivables. So what do we mean by eligible? Depending on who you are dealing with ( we prefer you deal with the good firms, not the less than good ones !) eligibility traditionally revolves around your Canadian and U.S. invoices under 90 days from an a/r aging point of view . Also, if you find you are unable to finance clients who are U.S. based you are absolutely working with the wrong party.

Drawing on a day to day basis on this facility are based on your a/r aging report .Company funding of your receivables revolves around your ability to produce an a/r aging that balances of course, and reflects invoices that are due and owing by your clients .

Many of our clients don’t understand a key process around which your day to day operation works. It’s called a 'blocked account ' process. Sounds complicated, but really isn’t. Here's how it works. Receivables that you submit are financed on a daily basis, with those funds being deposited directly into your regular commercial bank account. An accounts receivable financing company is generally, almost always, NOT a bank, but you still use your general bank account for all financing under this facility. Funds are usually deposited daily, as you need them.

But, when you clients pays, the process changes. You deposit those funds into a blocked account which is in the name of your financing partner. That makes sense, since you have already received the benefit of those funds. At this time any holdbacks that are in place with your facility ( generally no more than 10% are paid back to your firm, less of course , and here it comes .. the financing charge!

And now to that almighty question that we get, pretty well every day these days. What is the financing charge from a funding company for accounts receivable financing? This form of financing in Canada should typically not exceed between 1.5-2% per month. What clients need to bore down and understand is some technical terminology around what the actual charged ' discount ' (aka interest financing charge) rate is, what funds are held back in reserve on each invoice, and any small nominal charges re wire transfers, processing, etc.

Want to understand A/R finance a lot better? It’s easy to get bogged down in the technical terms, and some of the players out there do a great job of confusing this valuable type of financing. Focus on how it works, what it costs, and more importantly who you're dealing with. Consider seeking and speaking to a trusted Canadian business financing advisor who can assist you in ensuring this for of business capital works... for your company!


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/accounts_receivable_financing_company_funding.html

A Common Sense Way To Choose Canadian Business Leasing Companies For Equipment Loans – A Lease & Loan Alternative

Make the Right Choice for Lease Finance in Canada



Information for Canadian business on choosing the best method to select leasing companies for equipment loans – A lease and loan alternative selection process .




Rest assured you're in the same boat as thousands of your competitors - and whats that boat about? Simply not knowing who or what to turn to when selecting business leasing companies for an equipment loan for your business. More importantly, leases and loans that makes sense, not the kind where you wonder if your firm got a transaction at market rates, terms, and structures.

So is there a fast track to selecting the right lease finance company for asset financing that works, and makes sense? There are a couple of challenges we try and help clients overcome, not the least of which is the fact that there are tens and literally hundreds of firms all across Canada that ' seemingly ' fit your needs. And, and it’s a big and... if you have all the time in the world to develop relationships with these hundreds of firms, well then... let’s just say we're jealous!

But not knowing who to turn to can in fact, as many clients have experienced, cost you tens and thousands of dollars, depending on your past experience with leasing companies in Canada. One alternative is of course to send a lease bid document out to a large number or select number of parties. That makes sense for government agencies and large corporations probably, but not for small and medium sized businesses in Canada.

The reality is that all those lessors out there have their own unique business models, and are you ready... because this could be painful... they are going to try and fit your firm in a box . In a box? We're talking about the ' credit box ‘... that elusive credit policy that seems to be understood, by the lessor, but not perhaps yourself. You see each firm (who by that way had to go out and borrow money to lend it to you) has a credit box. In that box is a set of criteria around asset types, deal sizes, ratios, covenants, personal guarantees, outside collateral, years in business... well we think you get the drill

And oh yes, if there were one type of business equipment leasing company in Canada the search for asset financing might not be so daunting. In reality those hundreds of different firms are actually in 4 sub categories.

Those sub categories are bank lessors, independent leasing companies, captives (ouch! that even sounds painful - do they have a box also?) , and insurance companies.

So do we have a favorite and a recommended solution for each and every business owner and financial manager in Canada? Actually we do its number 5 in our list of 4! We're talking about an independent, experienced, trusted, and credible Canadian business financing advisor... one who should be an expert in lease financing. Utilize their experience for market knowledge, eliminating financing sourcing time, and ensuring you are getting market rates in the current low interest rate environment of 2011 where in fact lease financing is very competitive and wants your business. Adding value and saving your firm money is a powerful double punch in Canadian asset 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/leasing_companies_equipment_loan_loans_business.html