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Don’t Risk Losing Out On Franchise Financing Loans - Info For Canadian Franchisees Re: Franchising Loan Success

Guest post by: Stan Prokop

Article Overview: Information on Canadian franchise financing . What types of loans are available , who is lending , and is there one franchising loan strategy that makes the most sense .

Don’t Risk Losing Out On Franchise Financing Loans - Info For Canadian Franchisees Re: Franchising Loan Success

The reality of owning your own franchise business should not be over shadowed by the risk of not obtaining the right, and full amount, of franchise financing you need for a franchising loan. So let’s examine the right, and wrong way, of franchise loans and lending in the current environment.



The right amount of financing you need for your acquisition is often a somewhat stressful time in the total process of buying a business in this segment of Canadian business ownership.



Commercial lending financing does exist in the Canadian environment, it’s a situation of knowing what’s available, and then, of course, executing on completing the financing. Sounds simple, but many Canadian would be entrepreneurs often find themselves challenged by the whole franchise financing journey... and in reality it’s a process, not a journey.



In a perfect world you are looking for a franchise loan that has low or at least acceptable interest rates, nominal fees associated with the transaction, and has the right term or maturity that suits your payback plans and general cash flow situation.





But, does such a loan exist? It actually does, and you'd be surprised where you might find it. Many clients tell us they have spoken to the Canadian bank with whom they typically have had a long term relationship, only to find that little information has been forthcoming as to how they might be able to successfully finance their new business venture .



Naturally any bank that finds you willing to personally pledge and collateralize your home, savings, etc is very anxious to have your business and approve that loan, but it mixing your personal assets with your business venture the optimal solution. We find it rarely makes sense to follow that strategy, buy hey... that’s just us.



In Canada the financing options of franchise lending and loans is available, but somewhat less limited than in the U.S. . . . One or two large firms dominate the major franchise financing opportunities in Canada - these firms focus on the largest name brands and larger transactions that in many cases can range up to several million dollars in total financing required.



But what about the hundreds, even thousands of franchise loans that are required for purchases in the 100-500k range. Who finances those, and if they are financeable does the financing come with those low rates and great terms and structures we spoke of previously?



Actually the Canadian BIL/CSBF loan program addresses that question pretty perfectly. It finances your franchise on terms that compete with the big boys. And we're always rooting for the little guy!



The BIL program assists business purchasers such as yourself to effectively finance the franchise you wish to purchase. Rarely will your franchisor be able to assist you with financing so your ability to prepare a solid 'package' of info and position the package from a solid financial point of view is critical. Other financial solutions such as specialized equipment and asset financing can also round out your financial solution.



Bottom line, franchise financing should NOT be a risky or stressful time for the completion of your business acquisition. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you complete franchise financing with lending that makes sense... today.

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Article Tags: franchise financing, franchising, lending, loan, loans



Related Forum Posts
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).
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.
grants for restaurants - Well friend I don’t have any idea about government grants for restaurants, but I will recommend that you may try on some banks who offer loans for small business where the government will have some guarantee. Beside that Restaurants business is very risky so some of banks who gave some Financing Loans they will look at on it if there is enough solid business plans.
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!


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