A franchise financing loan. It’s one of two things you need to successfully gain your entry intro entrepreneurship – the other is of course selecting the right franchise and being approved for it!
Franchising finance in Canada requires a focused commitment by yourself as a franchisee. It is a combination of positioning yourself as ‘ finance worthy ‘ and at the same time ensuring you create the perception that you can successfully run and grow a business in the Canadian franchising environment.
Getting that franchise loan can be a challenge and a journey if you don’t have some proper preparation done in advance. And don’t despair, it doesnt have to be a solo journey. You can easily amass a core team of solid help – they might include your franchise lawyer, a banker or accountant, or a Canadian business financing advisor. Their advice and experience alone can take you over the top, which in your case is.. you guessed it.. Approval.
There still exists the odd would be entrepreneur out there that thinks that 100% OPM might actually work in Canadian franchisee finance. OPM is of course ‘ Other People Money ‘ and we can categorically say that 99.999999 % (have we made out point?!) of franchise loans in Canada require an equity contribution from you, the owner.
Don’t even ask your next question; we know it already: ‘ How much do I as an owner have to put into the business to make the financing work?”. For a starter that’s partly a wrong question or assumption already because you should be thinking in terms of financing the franchise so that is has a proper combination of debt and equity… and also the ability to grow via having some working capital for operations.
The majority of franchises in Canada probably don’t necessarily have an accounts receivable component… but you certainly need cash flow for inventory, operations, payroll, your salary, etc!
In Canada some very popular and established financing programs can accomplish financing your new business with only a 10% equity component – however to both qualify and be successful at the same time additional equity is often needed to make certain financial rations work.
In certain cases your franchisor might be able to steer you towards some financing success – either through a referral or relationships they have established sources. The mistake here is that franchisees sometimes assume this either guarantees approval, or that the franchisor in some manner will support or guarantee the financing. A word of advice from experience – this is not the case!
Actually though the best co-signer in Canada has stated they are willing to guarantee the majority of your financing. What? We can see the expression on our clients faces as we make that statement. However in reality it’s true, because the government of Canada in fact guarantees the financing they make under the Canadian BIL / CSBF program. And the majority of franchises in Canada are in fact financed in this manner. Talk about some great help!
We view getting a successful franchise financing loan as the ‘ hard aspect’ of getting your franchising dream in place. Their is a ‘ soft’ component to all this of course ; for example presenting yourself professionally, demonstrating your experience, and ensuring you have a crisp and complete proposal in place.
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchisee financing in this exciting industry component of the Canadian economy.
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years – has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
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