How To Be Successful In Financing a Franchise In Canada franchise loans

 

OVERVIEW – Information on accessing a franchise loan in Canada. Successful franchise funding loans come with certain requirements which are discussed

 

Franchising loan needs in Canada present a unique challenge for those entrepreneurs / business owners who require franchise funding loans to jump start their franchise acquisition. What are then the ingredients to the solution you need to acquire a business in this huge segment of the Canadian economy? Let’s dig in.

Whether it’s a large franchise or a smaller one some appropriate level of both personal investment and initial financing is required. Franchise loans are a very specializes segment of Canadian business financing. Although many franchisees are in fact experienced business people and have strong backgrounds in running a business it should be no secret that funding such an acquisition is always going to be somewhat of a challenge.

The players that finance franchises in Canada are limited to a small handful of participants – they include

Banks

Specialized Franchise Finance firms

Asset based lenders

In truth many franchises are in fact also financed by friends and family and the collateralizing of personal assets under such vehicles as home equity loans, collapsed savings, etc. Suffice to say that it should be the preference of all franchisees to secure the appropriate balance of personal equity and external debt. 100% owner personal financing of course doesn’t guarantee franchise success and also places personal assets at risk.

We mentioned Cdn chartered banks as a possible provider of franchise loans. In truth the banks focus on two areas of loans – one is utilizing the Govt of Canada Guaranteed Small Business Loan program – the other is their alliances with certain larger well known Cdn and U.S. franchisors (think golden arches as an example!). While those alliances don’t necessarily fully guarantee loan approval there is certainly a high level of approvals given the brand success of certain well known and proven names.

Note also that in many cases franchises can become a partnership with 2 or more individuals. Let’s just say in our experience in meeting clients who have entered into partnerships to purchase a franchise that we hope each party understands the strengths and character of their proposed partner! On the positive side having a partner you can work with also makes the personal investment requirement of buying and financing a franchise much more accessible – typically anywhere from 30-50% of the cost of the business tends to be financed by owners.

We would also add that recent changes to the Govt Small Business Loan, aka the ‘ SBL ‘, increased the loan amount available to 1 Million dollars.

What are banks and franchise specialty lenders looking for when it comes to loan and funding requirements for franchisees? The criteria frankly aren’t much more difficult than any other business loan:

Business experience

Reasonable personal credit history

A realistic business plan and cash flow forecast that reflects reasonable growth and profit projections

If you’re focused on business success in the CANADIAN franchise industry seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you. Problem solved!


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 10 years – Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

 

Office = 905 829 2653

greg@7parkavenuefinancial.com

‘ Canadian Business Financing with the intelligent use of experience ‘

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Stan Prokop

7 Park Avenue Financial
Canadian Business Financing