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.