Will you be ready with financing for your franchise when your franchise application is approved? Are you fully up to speed with how franchise lending and financing works in Canada. And finally, how exactly does the funding of your franchise business work and who are the lenders that participate in this area of Canadian business.
Wow… that’s a good solid handful of questions, so let’s explore the answers to stage 2 of your current predicament. Stage 1 is of course the thought and time that you put into selecting your franchise business to ensure you were on the right track to entrepreneurial freedom.
We wont be exploring the reasons why you picked any certain franchise, that’s your decision, motivated no doubt by opportunity and the ability to create personal wealth. But we do recognize that franchise lending might be a challenge to yourself, and the financing and funding of your business has left you a bit worried, to say the lease. So let’s end those worries.
In preparation for the financing of your new business there are a couple of pre-requisites that have the ability to stop you right out of the gate. Let’s make sure you know what those are and how to address them.
One of those key issues is your ability to demonstrate two things, a reasonable personal credit history and some business experience. Naturally it helps if you have some industry experience, but it’s not critical. By industry experience we mean, as an example, that if you are buying a QSR (QUICK SERVICE RESTAURANT) that you have some expertise in that area. But do you know what, if you can prove you can translate other business skills into the management of this business we’re pretty sure that’s a big plus.
The other key element that will eliminate your worries about getting approved by franchise lenders is what your proposal looks like. Proposal? Whats that we can hear clients say?
Well you can call it what you want, a ‘proposal ‘, ‘ business plan ‘… ‘Executive summary ‘… etc. Bottom line is that this document, when properly presented, has the ability to again eliminate a huge amount of the worries you have had on achieving the financing you need.
Whats in that document? It’s not as bad as you think, it’s simply a profile of yourself, the new business you’re buying, info on the franchisor, and a financial plan. No surprise there on the financial plan, lenders seem to want to know how they will be repaid!
Oh yes, those ‘ lenders ‘. Who are they in the Canadian franchising marketplace? Actually we’re not betting people, but we would wager that you won’t guess that the government is probably one of the largest franchise lending and financing partners in Canada. How is that ?It’s because they sponsor the BIL /CSBF program, which underwrites most Canadian franchises that are under 350k or so in purchase price .
Other lenders include one or two major independent finance companies, as well as numerous equipt financing firms that have specialization in areas of franchise equipment finance.
So is there a way to pull it altogether, i.e. eliminate those worries about franchise financing approval, and focusing in on who can help fund your business. One solid recommendation is to seek and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure your business is financed properly , at the same time eliminating those worries you had about who, and how ?
P.S. We can’t overemphasize the need to work with an expert in this area.