Franchise Finance in Canada requires both you because the owner, too a loan provider, to, on the combined basis, complete the financial lending you’ll need for any franchise acquisition. In Canada you can obviously be obtaining a brand new turn key franchise from the U.S. or Canadian franchisor, or oftentimes also thinking about purchasing a current franchise.
Several key questions will always be table by our clients – inevitably they’re:
-Just how much must i put in the company as my very own investment?
-Where perform the other funds originate from?
And, indeed, how lengthy will the process take!
We always encourage clients to begin considering financing very early along the way. An excellent place to begin is frequently, guess who? Your franchisor! That is mainly because should they have a multi unit system already in position they often possess a strong symbol of how these franchises were financed. Information you get in the franchisor or any other existing franchisees is invaluable, because the franchise financing journey is really a puzzle to a lot of.We are quick to include that you ought to never expect financing the help of a franchisor by means of loans, etc – The franchisor grows their business from selling you franchises, not loaning you cash.
Within the U.S. nearly all franchises are financed through the Small business administration, which means Sba. This can be a government backed / funded loan, and Canada includes a similar program that’s generally known by a number of different names – they’re SBL, CSBFL, and BIL. Many of these are acronyms for the similar program.
You need to most definitely add your business to both get access to business credit in addition to limit personal liability. Personal liability underneath the Canadian form of this program is restricted to simply 25% – that’s a good deal for that business proprietor, because it obviously limits your risk.
Most franchises in Canada are financed via the program. Sounds good to date right. We just emphasize clients that becoming successful within this financing program is only a situation of:
– making certain you realize the fundamentals from the program – i.e. what it doesn’t do
– submission using the information needed through the program
When planning your franchise financing concentrate on what amount you are able to lead personally towards the business, as well as comprehending the aspects of financing you’ll need. What exactly are individuals components? They’re:
– Soft costs ( example – franchisee charges, pre compensated rent, etc )
– Equipment
– Leaseholds ( if needed )
– Capital
We can not over highlight the necessity to readily experienced and credible business financing consultant who preferably includes a history of franchise financing success. An intensive strategic business plan, the best advice, and understanding you are financing needs – each one is critical elements to franchise financing success!