OVERVIEW – Information on financing franchise opportunities in Canada . Getting a Franchise Loan Approved Is About The Right Info With The Right assistance
A franchise loan search in Canada, when it comes to exploiting franchising opportunities that appeal the entrepreneur can be a daunting search. In fact top experts tell us that the industry as a whole recognizes the fact that access to the right amount of loans and financing is ‘ top of mind’ for new and existing franchisees. Let’s provide a bit of a ‘ backstage pass ‘into critical aspects of this challenge. Let’s dig in.
Franchisees in Canada have access to numerous services provided by their franchisor and other members of their ‘ team’. However actual loan financing tends not to be one of them.
Almost all franchisors provide a portfolio of ser vices around location, training, business development and other aspects of franchise survival. Is anything missing in all that assistance – Most often it’s financing!
It comes down to some pretty simple basics – knowing who finances franchises, understanding how they are financed, and knowing if you qualify for the capital you need to both acquire, operate , and grow the business.
Think of it as basically matching your profile to the right amount of capital – simple as that.
So what are those key basics that the franchisee, he or she, must have under their belt? They include:
Understanding term debt and operating capital needs for both acquisition and ongoing operations
Knowing the amount of capital that you need to invest as an equity investment that satisfies the franchisor, your lender, and the capital structure and ongoing needs of the business (Too many franchisees we work with underestimate long term needs for credit facilities and asset replenishment)
If you are approved for a franchise loan is there a clear understanding as to how the loan will be repaid out of cash flow and profits (The cash flow in your business plan must be realistic and allow for contingencies)
The ability to assess how much personal collateral/guarantees are required
In Canada franchise loans are made by a small handful of specialty lenders as well as the often used Govt Small Business Loan ( SBL) which has evolved into being perfectly suited for the acquisition of a franchise . Interest rates by specialty lenders as well the SBL loan are very reasonable , in our opinion and misc. set up fees or processing fees are ultra reasonable in the scheme of things.
The forms of finance you undertake come under 3 categories:
You need the right mix of financing to successfully attain all three. Numerous external financiers such as equipment lessors and working capital lenders (term and operating) round out the financing of franchise opportunities.
The most clarity to your financing needs will come out of your business plan, which will include info on yourself, aka the ‘ franchisee’, as well as the industry, the business model, and solid financial projections that provide a road map to the right financing.
To ensure you’re ready for a franchise loan when opportunity knocks in this industry seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan needs.
Author: Stan Prokop – founder of 7 Park Avenue Financial
Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of $90 Million of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:
7 Park Avenue Financial
Off. 905 829 2653
Cell 905 302 4171
‘ Canadian Business Financing with the intelligent use of experience ‘
7 Park Avenue Financial
Canadian Business Financing