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Cold Hard Facts On Franchise Financing Funding In Canada – Information On The Franchising Loan You Need

Guest post by: Stan Prokop

Article Overview: Information on franchise financing in Canada . How does the funding and approval of a franchise loan work and what are the benefits and disadvantages of certain finance strategies when purchasing a franchise.

Cold Hard Facts On Franchise Financing Funding In Canada – Information On The Franchising Loan You Need



We've observed over the years that business owners and entrepreneurs never mind getting the ' cold hard facts’ in business, as long as they are in fact getting ' the facts'! So let’s share some franchise financing information on how the funding of a franchise loan really works in Canada.



Purchasing a franchise in the Canadian marketplace can revolve around three different scenarios: a total new turnkey start, purchasing a business from an existing franchisee, or perhaps even adding another location or unit to the franchise you already own.



It may be a surprise to many people, but in Canada it’s actually quite difficult for existing franchisees to achieve financing for additional units. Conservative lending policies that focus on the debt you take on will often limit your ability to expand your multi unit dream.



When clients talk to us about the franchise financing information they need to complete loan funding we point out that a very aggressive strategy for achieving a high chance of franchise loan approval is in fact the government SBL program. While we believe it certainly was never intended to focus strictly on franchises, (and it doesn’t) it has become the perfect vehicle to successfully complete a loan funding in the Canadian franchise finance arena.



The challenge though then simply becomes understanding what you need to do to successfully complete the loan process. And doing it right can make this program the ' one stop ' solution for final franchising approval.



While be believe many clients, and perhaps rightfully so believe the Canadian chartered banks will not support them on their franchise finance attempts the reality is that bank can become your best ally when it partners under the federal BIL/CSBF program .



If you were to finance a franchise under standard business financing arrangements, outside of the program, how could this in effect be accomplished? First of all, you probably would need a very hefty down payment, otherwise known as your equity injection. Payments would be higher if you were unable to obtain the right loan term (amortization), and, suffice to say, it certainly might take quite awhile to get your transaction approved.



And that's if, and its a BIG if, you get a bank or financial institution onside given the pool of prospective lenders in Canada is actually limited to only 1 or 2 commercial finance firms . Suffice to say also that you'll probably be spending a lot of time educating a lender about what you need and what you are trying to achieve.



So is there a better way? We categorically think there is! As we said, the BIL program in Canada perfectly suits a franchise financing requirement.



Why? Simply for the following reasons. First of all your total permanent equity injection is only 10%, allowing you quite a bit of room for working capital needs as you start your business . Terms under the program are typically 5-7 years. That means a typical 350k loan will cost you around 6700$ a month which is of course incorporated into your cash flows and income projections.



No outside collateral is required, which certainly isn’t the case in many other forms of business financing, and even your personal guarantee is very limited. Talk about a double whammy of goodness!



So ' how long would this all take ‘is a typical question clients have. If you utilize the expertise and resources of someone such a trusted, experienced and credible Canadian business financing advisor the whole process can in fact be completed in a matter of days - if you are prepared!



So, that’s the cold hard truth on some franchise financing information in Canada. Can you handle the truth?! We're quite sure you can, because it’s all you wanted in the first place!

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Article Tags: franchise financing information, funding, loan



Related Forum Posts
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
canada resources - I used to have a connection to a franchise consultant in Canada at "Franchise Officer" in Toronto. I wish I could remember his name ( but I can check my files at the office tomorrow). Anyway, he had a lot of connections to banks in Canada. He may know of them and may be able to offer some feedback. If you are looking for a business loan, Canada has similar business loan programs to that of the USA's Small Business Administration (SBA). I think its SLBS in Cananda, and I probably have the list of it's lenders in my office also. Do you think either can be helpful? If so, I can get back to you with this information tomorrow. Let me know!
Re: Hello EvanCarmichaelers, and Thanks! - "Carmichaelers" ..nice.. Over at the Young Entrepreneurs I'm going to start calling my readers "DSilvelers" - I like the sound of that! Welcome on board theFranchiseMarket. Do you run a Franchise Business or are involved in Franchising in anyway?
Money I made while in School - While in university I did have a Student Loan (still paying that bugger off) and had a part-time job as a Call Center agent (inbound). *Canada* I also designed websites (outsourced all the work). I just worked on getting new customers, managed the projects to completion and helped create Marketing Plans for my clients (Online and Offline). *Canada* When I was studying the in the States I also made some money as a Part-time Flight instructor. *USA*
seeking investors for global finance opportunity - Phoenix Global Funding, Inc. is a Global Commercial Loan Brokerage, Merchant Bank, and a Business Consulting Firm that can work on commercial deals of all sizes. Our greatest strengths are revealed through our superior internet interface and our extensive private network of lenders and equity partners with which we can service any company on the planet by having the ability to broker and coordinate mergers, acquisitions, and funding of all kinds. As a full service commercial financial conduit we also provide valuation, business management, and profitability consulting. I am offering common stock ownership in Phoenix Global Funding, Inc. It is exciting to be in a position to be able to share not only ownership but profit in this latest project. Our business plan was developed from the oldest, most reliable and the most profitable business model ever created, LENDING. This is all about what the big boys do on Wall Street everyday. We are raising US$1,000,000.00 with share prices starting at $1.00. The exit strategy is in 3 years with a minimum 3 to 1 return on capital, plus a 20% profit share annually.


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