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Franchise Funding and Financing Options for Franchisees in Canada

As a new potential franchisee in the Canadian franchise industry you want, and need! … some basic info around how franchise funding works in Canada. Those financing options may be critical to your overall success as a new entrepreneur in your chosen industry.
Ironically experts tell us that one of the main reasons that people don’t go into the franchise arena as independent business owners and entrepreneurs is because they feel they either did not have or could not raise the funding for the business.

Naturally in the current tough ( but getting better!) economic environment start up capital for any business is a challenge – so having access to the best information and resources around franchise funding is clearly a major key to success .

It kind of all starts with a business plan , we meet with many clients who have initially been refused for franchisee financing for the very simply reason they weren’t prepared and the reality is you don’t get a lot of chances in financing a new business when you are unprepared .

If you aren’t able to prepare a proper plan yourself you can speak to a trusted advisor in Canadian business franchise financing and one can easily be prepared for you – it’s all about working with an expert. The key part of any business plan is that you can present your financials properly – which simply means what sales you feel you can achieve, what your expenses will be, and what projected profits will be . A key element of all that is your ability to generate cash flow to repay your franchise funding loans – which makes perfect sense – from the lenders perspective of course!

Your plan has to be presented properly and you should be able to anticipate any questions the lender will have about your experience, how you will run your business, what other resources you can bring to the table, etc.

It’s not always about size in life, but in this case we do advise clients that the larger your franchise financing requirement is – well you should be expected to have a more detailed proposal and plan.

Franchisees in Canada may not be aware that their biggest ally Vis a Vis a financing option for their new business is the Canadian government! That tends to floor our clients when we share that info with them – but the reality is that the majority of the financing in Canada for franchisees revolves around a government sponsored loan that is formally called the BIL or CSBF loan program. It is underwritten by he government, but administered by the banks in Canada

Rates for the above mentioned franchise funding and loan program are very competitive and there are some key requirements you should have ready when you submit your proposal for consideration. And by the way, OPM does not work in franchise financing in Canada – that being the acronym for other peoples money! We are always explaining to clients that the funding of their business comes from two sources, the loan or loans, and their own personal equity injection – so you must absolutely be prepared to make a personal equity investment in the business.

How much of your own equity is required – that can be calculated by simple formulas pertaining to the amount you have to borrow and your ability to meet debt to equity ratios and working capital solvency .

There are some great franchise opportunities in Canada. Investigate your financing options with a trusted, credible, and experienced Canadian business financing advisor who will work wit you as a potential franchisee to achieve business financing success.