Common mistakes that must be avoided when entering franchising financing loans


Many Canadians will become entrepreneurs and business owners find that franchising financing is often the same as challenging (if not more) than the process and work and thorough testing in choosing the right business to buy.

Let’s share some hands, advice ‘real world’ and tips on franchise finance in Canada. Fantasy may often work for you, but not in business financing!

Business financing is a challenge at each level, large companies wrestle with them every day, and you wrestle with it when you reflect on your new business business. Naturally all of our comments and suggestions related to new franchises or existing business purchases are sold by the franchisee.

Many franchises will do well to understand how the franchise industry is regulated in Canada and what type of disclosure and protection are available for you, and, to be fair, franchise. The rights and obligations you have under something called ‘Arthur Wishart Act’ if you are in Ontario – another province has the same law. We strongly recommend that you see that action, and frankly your lawyers might be the best to do this.

The client always asks us what prices they expect to pay for franchise financial loans in Canada. We are very clear about that, and the answer is ‘it hanging’! Is the rate in the range of 5-6% sound good for you. We certainly think it gives you a small business and in many cases it is seen as ‘start up’, regardless of the depth and reputation of your franchisor. The interest rate is available for you through loans that are technically known as BIL loans, are also called CSBF loans. Lay people call it a small government business loan, and it is a way in which most franchises in Canada are financed. Talk to trusted, credible an experienced advisor in this franchise finance that can succeed in completing this financing for you.

Is the franchise loan the only way to finance franchise? Obviously no, other alternatives include cash-term loans, equipment financing for every hard asset in business, and the last part of the puzzle, which is your own owner’s equity or cash investment into the business. All businesses are financed by borrowing (debt) plus the contribution of the owner’s equity.

Can you get a franchise financial loan without personal guarantees – a quick tip and the answer is ‘no’, we don’t think so, but we also show clients the loan bil mentioned above only requires a personal guarantee of 25%.

Clients always ask whether the franchise can be financed without a down payment – this is our fast tip about it – no, not at all. Whether you finance the pizza franchise or build a MFG car planting lenders in North America will look for some owners of financial involvement in the project. Act balance is how much, because there are pros and cons to lower too much or too little equity.

Can you buy a franchise without thinking about a business plan – we don’t think so, and the best act info that we can give to you is doing a business plan, and if you don’t prepare it personally still involved. in input and process. This will direct you towards the same level of financial success in your business.

Prospective franchisee always asks if an assessment is needed. In general, but the biggest tip that we can provide to you in this field is that the simple costs of the actual assessment can be the biggest financial benefit for your franchising financing, because it has the ability to increase lender trust and reduce your personal financial estimates commitment to business.