Critical Info On How To Finance A Franchise? Financing Franchising Costs In Canada

Financing The Canadian Franchise


Information on how to finance a franchise in Canada . Financing costs vary in Canada per program and the lender . Here’s why!


How to finance a franchise in Canada becomes an immediate and looming decision # 2 , right after your having made that choice to enter this industry as an entrepreneur / business owner .

But what about the financing costs for yourself, the new franchisee? What is financeable, what is not, and who can you turn to for help, guidance, etc.
Naturally it goes without saying that the actual financing of your new business can be the difference between making it... and the other less then favorable option... failing.

Let's examine some key franchise basics for the Canadian entrant into the industry. Where is that financing going to come from? It general it boils down to two parties, you with some type of equity / down payment component, and a financing partner. That financing partner can potentially be two finance firms, one specialized firm, or a bank. More about the bank later... and trust us, its good news!! Not what you might be thinking!

You will notice that we have eliminated one party that many new franchisees think they are going to get help from, and that’s your franchisor! The reality is that although some indirect help should be expected you should not expect a cheque from them to help finance the franchise. Why? They are in the selling business, not the finance business, as simple as that.

It's important to spend some time in your business plan (yes, correct, you heard right ... you need a business plan) to give some thought to and break down the actual components of the franchising costs. Those categories are typically assets, working capital, leaseholds and franchise costs. In some larger franchise purchases there might even be a real estate component to your deal, but that’s a bit rarer. Oh and don't forget that franchise fee!

One you have your breakdown in front of you it’s critical to start to determine what is financeable and what is not, and then focus on who is going to finance those components.

Typically the franchisee fee is not financeable in Canada... in essence we can call it the goodwill component of your balance sheet, just as it would be in the purchase of a business in a non franchise industry . That ties nicely into our next point, which is simply that your down payment or equity part of the deal typically also has to cover the franchisee fee. In a typical franchise in the 350k range in Canada we tend to see that fee in the 25k range.

Many business owners focus only the cost of the franchise and getting to the goal line on their purchase. They forget however that sales don't necessarily start strong on day 1, and your fixed costs and payroll can catch up with you pretty quickly.

So don't forget to take a hard look at the working capital component of you deal, which should be thought about, and addressed! in the business plan. Naturally working capital in the retail industry is a lot less of a requirement than in a non retail business ... it’s the difference between a cash business and waiting for someone to pay you.

In Canada there are only 1 or 2specialized franchise finance firms which entertain a full financing of your franchise. If you don't qualify for that scenario, or if your franchisor is not part of that program a solid solution is the BIL/CSBF loan program. It's a government guaranteed loan that allows you to finance equipment, leaseholds, etc up to 350k, which covers a large majority of costs in most franchises. And by the way, interest rates, terms and structures are excellent, and you don’t even have to personally guarantee the full amount.

Focus early on relative to you challenge of how to finance a franchise in Canada. Your business plan is key, as is your choice of financing partner or assistance. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs as a new entrepreneur in this major Canadian industry segment.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCING 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/how_to_finance_a_franchise_financing_costs.html

Excuse Us For Getting Fresh .. About The ABL Business Credit Line Revolver Facility . Asset Based Lending … Works . Here’s Why!

The Asset Based Line Of Credit Is A Solid ‘ Day To Day ‘ Business Financing Option

Information on the ABL revolver, the business credit line that combines asset based lending with a working capital solution.






Fresh counts, whether we're at the grocery store or in today's example, the business credit line known as the ABL revolver, aka ' asset based lending '.


Canadian business owners and managers don't often realize that that they have more of a choice in business credit lines than they think. And when it comes to choice and flexible terms all of a sudden asset based lending facilities are getting... you guessed it... popular!

That's of course great news for companies in Canada who are looking for alternatives for day to day operating financing. The traditional small handful of firms who offer this type of financing is growing to the point where you might not realize it, but there are people willing to fight for the ability to provide you with business credit. That's the type of competition we like.

Cost is always a factor in business financing, and there is a broad spectrum of pricing in Canada that is primarily based on two factors you can pretty well guess - facility size and credit quality.

In case you haven’t heard of this method of business credit it’s simply a comprehensive credit line based on the asset of your business - those assets include inventory, receivables, fixed assets, and land and buildings if that fits into your overall capital structure.

The Canadian business owner / manger can use the ABL revolver facility for a number of reasons, and they include day to day operating capital, restructuring, acquiring another firm (yes, buying your competitor!) and our favorite reason - growth! That growth reason is one of the most important, because the asset lending line of credit allows you to grow your business without the constraints you face sometimes with chartered bank commercial facilities.


We're often asked about the ' size requirement ' in this type of business borrowing. In general we tall clients that they qualify from a low of 250k all the way up to facilities in the many millions of dollars.

Quite frankly there isn’t really an upper limit, as long as you have the total assets to back up the facility. The reality is that ABL credit is very close to becoming ' mainstream' in Canada, and that’s a good thing we think.

To be honest many firms in Canada tend to use asset based credit lines as a bridge to other financing. This often means that the facility is used for a year or two, sometimes longer, as the business owner’s work towards the more traditional financing that is recognized in Canada, i.e. our banks. Many simply s are very comfortable with asset based lending lines and choose to remain with ABL!

As we said, the bottom line is ' ASSETS ', so if your firm has them consider Canada's newest form of business financing, the ABL REVOLVER , whether you're looking for something new, or an alternative to your current situation.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your total financing needs when it comes to the business credit line.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED BUSINESS LINE OF CREDIT 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/business_credit_line_abl_revolver_asset_lending.html

That ‘ Positivity ‘ Feeling . Cash Flow Financing & The Secret To A Working Capital Formula For Canadian Business

Unlocking The Mystery Of Cash Flow Solutions For Companies In Canada !


Information on a solid working capital formula and solutions for cash flow financing in Canadian business.



We're not even sure ' Positivity ' is even a word... but... if it is... it seems like a great description for what Canadian business owners and financial mangers are looking for when it comes to cash flow financing and knowing the working capital formula they are searching for has finally arrived .

We pretty well never get tired of explaining to clients that sales and profit growth, unfortunately, does not equal cash flow in the same amounts! Over the long run, yes, but in the short run... never. And when there is a very serious lag in that gap it’s important to understand the activity in between, and, as importantly the solutions you can undertake to beat the cash flow gap.

When we talk to clients about the working capital formula and solutions we're the first to point out that those cash flows from profits are a key source of cash. At the same time cash flow financing solutions are:

Receivable financing

Inventory financing

Asset based lending

Sale leasebacks

Tax Credit Monetization

Purchase Order / Trade Finance



And, dare we say it, bank lines of credit and term loans.


As the business owner quickly finds out, it’s a two pronged challenge, knowing how to finance those working capital needs, and knowing you have the solutions in place when you need them. I.e. timing.

The good news here is that although revenues can often fluctuate widely the business person should be able to have a strong sense of expenses

So... back to those sources of financing. Again, we're talking about an evolution over the life of your business, and when you are a relatively new business or start up the challenge to finance cash flow is a lot more elusive. At the end of the day sources of financing at this point in your business history often tends to be your own funds. The proverbial ' friends and family ' and access to working capital via credit cards, personal collateral etc.

As the business matures a solid form of cash flow financing actually becomes your management of 2 key aspects of your business"

Receivables
Payables

As your accounts receivable ((and inventory by the way) grows these can be both managed, and financed. Hopefully both!

Very few term loan solutions are available for cash flow ' Positivity '. And given the fact that term loans bring debt to the balance sheet and require fixed repayments that's not necessarily a bad thing.

Many Canadian business people assume the Canada Small Business Loan program can bring working capital and cash flow ‘positivity’
It can't, as this program only finances assets, leaseholds, computer software, real estate, etc.

An action list or summary that we often provide to clients challenged for cash flow solutions includes the needs for a cash flow budget outlining the amount of financing you need and how it will be repaid,

And our final advice today... simply that when you are starting to be quoted as saying ' cash is tight ' it might be a little bit late sometimes. Speak to a trusted, credible and experienced Canadian business financing advisor on cash flow 'positivity ‘solutions.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW FINANCING SOLUTIONS





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/working_capital_formula_cash_flow_financing.html

Leasing Assets? Secrets To Effective Lease Financing And Equipment Loan Strategies For Canadian Business

Canadian Asset Financing


Information on leasing assets in Canada , Why lease financing and equipment loan strategies make sense for Canadian business . Here’s why!





Looking to get ' one up ‘when leasing assets in Canada. Whether it's lease financing or a bridge equipment loan of some sort there are some ultra solid strategies that give you the ' secret ' to financing assets properly and effectively .

If your firm is profitable and growing there is always the need to replace assets. Your firm might not be large enough to have a tax manager or an experienced financial accountant but even the regular business owner recognizes that the need to balance an accounting, tax and cash flow operational needs when it comes to new equipment , whether that be shop floor assets , computers, rolling stock, etc.

Given that business (at least to us) seems to move at warp speed these days it’s critical to stay on top of what we can call the ' tech curve '. We're reminded of one of our favorite old lines ‘this technology is so leading edge even we don’t quite know what it does ‘! That just brings home the point that lease financing is one great way to help you manage that curve.

Employing the right lease strategies allows you to buy the latest and pay for it over time and by employing techniques such as an operating lease, or structuring your transaction to defer payments until benefits from the asset occur... well... we think you get the point.

In many cases solid pricing and approvals can be arranged directly through manufacturer financing plans, In Canada one of the main groups of lessors are what the industry calls ' Captives '. These are internal finance organizations within your manufacturer who are incented to come up with creative and low cost strategies to move product. And with all due respect to credit personnel inside these firms they are very much pressured to provide approvals that make sense given the parent companies need to generate revenues. We can attest to that one as we sat in that chair for about 20 years!

Our above point on approval to your transaction is really another one of our ' Secrets ' to effective equipment loan strategies. That's because the general competitiveness of the leasing industry gives you a greater chance of approval, more so if you find that your Canadian chartered bank won't finance the transaction you need.

It's no hidden secret however that the most common reason for choosing leasing is in effect that whole issue of cash flow and making maximum use of your credit facilities and working capital given the need to balance those with your requirement for new assets .

The ultimate win when it comes to leasing assets is your new found ability to reduce costs and cash outflows while at the same time gaining the benefits from the asset you're acquiring . As the industry itself puts it, ' do you want to own the asset, or on the other hand, get the benefits of using it '? We'll take the latter any day.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your lease financing needs.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET AND LEASE FINANCING 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/leasing_assets_lease_financing_equipment_loan.html

Buying And Financing A Business Purchase With An SBL Government Loan In Canada

Let Your Business Purchase Put You On The Road To Richistan !


OVERVIEW – Information on the buying and financing of a business purchase in Canada using a SBL government loan strategy. A Hands On How To!




At some point in time many business people have the opportunity to purchase a business in Canada. That’s buying a business, not starting one by the way!

But financing the business purchase, i.e. putting your transaction together is another story. Here's one great way to do it if you business fits some basic criteria, and it’s via the SBL government loan. Finally, some help from Ottawa, but we digress...


There are of course the obvious advantages to buying versus building a business. First of all it's easier to find if you know what you are looking for, and many of the challenges of starting a business are immediately eliminated when you have a turnkey operation already in place. Finding premises, buying and financing assets, and generating revenues with a sales / operating team are instantly removed. Not that we're making anything too easy.

Oh and buy the way when we think in turnkey, we often think franchises, and to make it perfectly clear our strategy today also covers existing franchises, or corporate stores owned by the franchisor .

Getting a clear look and quick access to the business financials, but no matter how good, or bad... those financials look it’s a case of also trying to understand the motivation of the seller. Things like a financial tool called the VTB... the vendor take back can often play a key role in our financing strategy today and the proverbial ' motivated seller ‘ is often ok with a vendor take back . (If not, he or she is probably willing to negotiate price a bit more?!)

When you utilize the government SBL business loan for a business financing strategy in Canada you need access to those financials. They will tell us what assets are in the business, and by the way, it’s difficult, if not impossible to finance a smaller concern when there is a huge ' goodwill ' component in the final purchase price.

Although the income statement is important in our financing strategy via the SBL loan it’s not the deal breaker. However clearly you do want to know that the business is generating sales, that’s growing sales, and profits. If not the business can still be financed, don't despair, but you better have an action plan in place for that missing sales and profit strategy!

Getting back to the balance sheet, that’s key today in our finance strategy of buying a business in Canada. Here's where the SBL government loan comes into place. That’s because it finances the current and fixed assets of the business, as well as existing leaseholds. Leaseholds?

Yes, the government loan financing via the BIL/CSBF program finances those three asset categories - fixed assets, receivables as a portion of the current assets, and leaseholds. A qualified appraisal of these is required and the SBL program finances a total of $350,000.00 of these assets. A down payment or equity injection by yourself, as well as perhaps our previously mentioned vendor take back can get you often pretty close to a 1/2 Million dollar financing for your business purchase.

So, is that a creative strategy? We think its closer to a common sense strategy, and one that comes with great rates, terms, and structures, including limited personal guarantees and flexible repayment options that include repayment without penalty.

Buying and financing that business purchase via the SBL loan is a solid way to become a Canadian entrepreneur. Speak to a trusted, credible and experienced Canadian business financing advisor to kick start your business purchase.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE FINANCING 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/buying_business_financing_purchase_government_loan.html

When Do You Need AR Financing And Is It Really That Simple And Effective ? Factoring In Canada

Looking To ‘ Cash Flow’ Your Largest Asset ?



Information on factoring in Canada, Why AR ( a/r ) Financing Works, and how it works!.. in Canada



No secret that Canadian business owners and financial managers in the SME (small / medium enterprise) sector in Canada are constantly seeking simple and effective business financing solutions in Canada. That's where AR financing comes in – it’s assistance for the constant need for cash flow.

We don’t think we can count the number of clients we meet that always bemoan the lack of cash to run their business. And borrowing via some sort of term debt solutions isn’t exactly what they consider a solution.

Enter ' FACTORING '. In the right circumstances (more about that later) its time efficient and not really any sort of complicated approval process. The fundamental solution it provides is very simple - your clients owe you money but you would rather have that funding... today!

Although conceptually its similar to a business bank line of credit the difference is that the documentation surrounding this Canadian business financing solutions essentially has you selling those receivables, not just ' borrowing ' against them, as you would with a chartered bank in Canada.

You get the funds immediately, basically you’re able to cash flow the receivable as soon as you generate it and are able to document that you have delivered your product or service.

So how does the actual cash flowing of the invoice work. Let’s take an example of a $ 50,000.00 invoice as an example! As soon as you have issued that invoice you receive cash for the invoice, less a discount, which is typically in the 2% range in Canada, sometimes more... sometime less.

Our style is not to complicate things, but in actuality usually an additional 10% is held back as a reserve, or holdback. That money comes directly back to you when you client pays. So at the end of the day all you have in effect ' paid for ' is the invoice discount, the previously mentioned 2% range.

That seems very simply, but typical client questions are:

Why does the discount or financing cost change or vary?

Does the quality of my A/R portfolio affect pricing?

What if my client pays doesnt exactly pay on time?

Good questions ... here are the answers:

Financing costs vary based on the type of firm you are dealing with and the size of your monthly receivables, In general your firm can attract better pricing with a higher quality customer base, but this is certainly never always the case. And finally, we haven’t really met anyone that ' pays on time ' these days when cash is valuable. So the factoring industry addresses this by charging a daily ‘per diem ‘rate based on what one additional day of the overall financing cost we have referred to.

So why is this form of financing effective? Simply speaking it’s your new cash flow and working capital solution, allow you to finance receivables and inventory and grow your business. It's no secret that cash flow runs every small business and every FINANCIAL POST 100 firm in Canada. Factoring, aka ' RECEIVABLE FINANCING “helps you smooth out the ups and downs of the business cycle ... effectively.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING AND A/R 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/factoring_ar_financing_canada.html

Your Futile Search For Government Business Loans Ends Here. The Canadian Govt SBL Loan Navigated ….Perfectly!

Real World Financial Help For Gov’t SBL Loans


Information on the government business loans in Canada. Let the SBL govt loan put your business on solid footing.



It's over. No... Really it is. That somewhat futile search for what you have been looking for - government business loans. We're going to take you from the world of government websites (boy are they jam packed) to the real world of the SBL govt loan.

The real world is where we toil everyday and we'll share key info and advice on what thousands of firms such as yours look for additional financing not available elsewhere.

The trick is how to get that loan, and its approval through a process of qualification and documentation. We'll focus on three basic areas -

1. Why is this program such a great option?

2. Where exactly do you get this loan - that... in spite of the government websites! is still a mystery to many

3. What do you need to both apply and get approved?


Taking the guesswork out of the SBL govt loan process is where you want to be, right? So why is it worth the time to spend on this great business financing option? The reality is that you're in a large group, that’s the tens of thousands of businesses in Canada our SBL program deems as small.

That brings us to the definition of ' small ' which in the case of government business loans is under 5 Million dollars. Oh, and by the way that ranges from start up with zero revenues to actual sales, annually under 5 Million dollars.
It's of course firms such as yours that employ people, and represent a mega huge portion of Canada's economy. Thats in effect our answer to our above question #1 - obtaining financing is difficult for any business, any size, anytime... so for your firm to have access to a program that has great rates, structures and terms , with only a partial personal guarantee ... well, we think we have made our point!

So where do you get an SBL loan? In Canada this program is sponsored and administered from a regulation perspective the Industry Canada, a branch of our government. But the govt has arranged for your local Canadian chartered bank to run and finance the program, with a majority of the loan, in effect ' guaranteed ' to the bank... by the govt.

So, it’s as simple as that? Trucking down to your favorite local bank manager (are there even bank mangers these days ... i.e. the guy or lady that sits in the corner?) and applying?

Not so fast. Here's where reality hits the pavement. Although the program is available from every chartered bank, and even some credit unions not all banks love the program, some have changed the rules a teeny bit, and many don't employ staff who are both familiar with and are comfortable with putting the loan together .

And trust us... it’s not rocket science. We can't think of one aspect of government business loans that is really that different from any other type of business financing you may have applied for... other than ensuring you have paid and filed your personal income taxes. (Hey, it’s a ' Govt' loan!)

Program highlights?

Maximum borrowing of $350,000.00.

Great interest rates for the start up or established firm.

25% Personal guarantee only.

And by the way the program finances both assets and ‘leasehold improvements’. How good can it get?!


Looking for a fast track to the SBL govt loan? Speak to a trusted, credible and experienced Canadian business financing advisor who can get you from the 100 yard line to the goal line in a process that isn’t as hard as you thought.

7 PARK AVENUE FINANCIAL
CANADIAN SBL GOVERNMENT LOAN 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/government_business_loans_sbl_govt_loan.html