OVERVIEW – Information on acquiring franchise financing loans in Canada . Franchising finance is successful when the franchisee has mastered these critical issues
Franchise finance success in Canada – What business person /entrepreneur wouldn’t want to be a ‘ high achiever ‘ in the one area that is critical to success – franchising financing. Let’s dig in.
The good news in the franchise industry is that the few rougher years after the 2008 recession appear be quite well over – that has made it easier for potential franchisees of new and existing franchises to acquire the capital they need – if.. And it’s a big if… they know how to go about it.
The most common ‘ type ‘ of loan for a franchise is a ‘ term loan ‘. It’s a fixed payment loan that is amortized over a period of usually 3-7 years. These loans are acquire and achieved through only a small handful of sources – a specialty franchise finance lender , ‘ the bank ‘ ( more about that later ) and a combination of commercial financing options that , when cobbled together put you on the path to loan success .
All these solutions might include one, or a combination of equipment and leasehold financing, working capital, credit lines, etc,
One key component of the franchise acquisition is the owner equity, aka ‘ down payment ‘ component. While there is no right amount that broadly qualifies all franchisees a typical range is between 25-50%. KEY POINT – In some cases you only need to demonstrate you has access to capital, not necessarily provide it.
Your down payment, loan amount and ongoing finance needs are best set out in the financial portion of your business plan. This document should lay out in a clear manner the cost of the business, your loan amount, your on going incoming cash flows, your loan payments, and , most critical – the timing of your cash inflows . For example while many franchises in the hospitality business are ‘ cash businesses ‘ other franchises might be selling on credit terms – whereby they will only collect their invoice sales 30-60 days later .
In Canada there is a major government program that finances a huge amount of franchises. The program is called the CSBF program and finances loans up to 350k on very reasonable rates, terms and structures. The Canadian government guarantees a very large part of the loan to the participating bank.
If you want to be a ‘ high achiever ‘ in franchising finance success consider seeking out and aligning yourself with a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who will ensure the correct options relative to your situation will be explored.. And achieved… making you that ‘ high achiever ‘ in the explosive franchise industry that is such a big part of the Canadian economy.
Author: Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN FRANCHISE FINANCE EXPERTISE
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