Can A Franchise Finance Business Loan Be Creative? Here’s How Canadian Franchise Finance Works!

Is it actually possible to get ‘ creative ‘ when considering a franchise finance business loan for you new Canadian role as an entrepreneur in franchise financing? There are some tried and trusted rules we use in the franchise lending area, but a little creativity has never hurt anyone we believe!

If you haven’t considered how to finance your new business in the franchise industry then we feel it’s probably a little too late in some ways, as your ability to finance your business properly we think has a lot to do with the ultimate growth and success of your business. There are very focused lending sources for the franchise area of financing in Canada – the trick of course is to know what they are and more importantly how you can navigate the ‘ maze ‘ successfully.

The reality is that if you have some industry experience in your new business and a proper finance plan you have a much better chance of financing your business properly.

So, who can you turn to in terms of creativity and resources for franchise financing? Clients are amazed when we tell them the most creative partner in franchise financing in Canada is none other than the Canadian government!How could that possibly be? Simply because a program guaranteed by the government and administered by the banks could not be any more creative than this.

The program is the ‘BIL’ loan program, and it provides you with financing up to 350k for your new business. Are the terms onerous? Hardly! The essence of the program is a 5-7 year term loan, with great rates, limited personal guarantees, and some other elements of flexibility. If that isn’t creative then we don’t know what is!

Naturally all the creativity in a business loan of that type for your franchise finance scenario should not be reliant on just one lender – the other lender is someone you know very well. Yourself. That’s simply because when you look at the total financing of a franchise in Canada the two components are simply debt (the funds you have borrowed) and the equity, or money you have put in yourself. These equity funds, i.e. your commitment to the business, typical come from savings, the proverbial ‘ friends and family ‘ support, and investments or collateral that you have available.

Getting back to our key subject of creativity, our above noted BIL loan program only covers certain aspects of a franchise finance scenario. You can augment that loan with flexible equipment financing that has low down payments and extended amortization terms, as well as, in some cases, a working capital term loan.

We never forget to remind clients that the franchise financing plan is a two stage process, acquiring the business, and making sure they have some capital and funding to operate and grow their new business.

In summary, you can be creative when you are looking for info on how Canadian franchise finance works. You need knowledge on what funding sources are available that are specialized to the franchise industry, and assistance in executing a proper financial plan. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing that creativity!

Bad Credit Car Loan Vs Guaranteed Auto Financing – Will You Save Money?

You’re in the market to buy a new car and that’s great. Today most everyone buying a new vehicle will need some form of auto financing and if you find your personal finances or credit are less than perfect, you can still get a very affordable car financing if you know how.

An informed car buyer is a smart car buyer. When you know your auto financing options and you have your car financing set up and approved before you talk to any sales person, you can walk into a car dealership and negotiate a better deal on your terms without feeling intimidated, regardless of your financial situation.

If you know that you have certain credit challenges, you should understand the differences between bad credit car loans and guaranteed auto financing.

Bad Credit Car Loans…

Bad Credit Car Loans typically have been available through new car dealerships on the purchase of a new car or a pre-owned certified used vehicle. The actual auto loan financing paper-work is handled at the dealership but in general, the bad credit car loan finance contract is sold off to another lender. That lender will maintain and service your loan. Loans typically have a term of 24 months up to 60 months. The downsides to a bad credit car loan are that many franchise car dealerships are not set up to arrange these type loans in-house, interest rates and cost can vary widely and limit your auto purchase choices.

Guaranteed Auto Financing…

Guaranteed Auto Financing differs from a bad credit car loan primarily in that this type financing is offered directly by smaller or independent auto facilities. Your finance contract is provided by the actual auto wholesale dealer and the loan is paid directly to the auto dealer that sold you the car. In other words, you would be financing your car purchase from the company that owns it and sold you the vehicle. Guaranteed auto financing is used for the purchase of used or pre-owned vehicles and not typically for purchasing a brand new car or truck. Loan terms are shorter than more conventional auto loans and they rarely offer terms over 36 months.

The big advantage to guaranteed auto financing is that often no credit check is required to obtain this financing. Payments are normally made weekly and sometimes in person. One disadvantage to this type of auto loan is that many car dealers providing guaranteed auto financing will never report your credit to the credit bureaus. So if you’re making payments regularly and establishing an excellent payment history, this will not be reflected in improving your personal credit profile or your credit score.

Your best approach would be to start now and see what financing options are available for you. There are excellent specialized auto financing services available online today that offer a whole range of affordable car loan programs even if you’ve been turned down for financing or you have poor credit, bad credit or other financial considerations, you’ll be surprised at how they can help you to buy a new car.

You see now that there are major differences between a bad credit car loan and guaranteed auto financing and there are other financing options besides these. Get approved for the best car loan for you first, then walk into the car dealers and negotiate on your terms.

Looking for Ways To Finance a Franchise? There Is Only 1 Way When Financing a Franchise Investment!

You’re there. You have made the decision. You’re committed. You have timelines now. We’re talking about your franchise finance decision and the next challenge you have in the franchise process – financing a franchise. How many ways to finance a franchise are there? Only one… the right way! And we’ll show you how.

The ability to finance your franchise properly and satisfy the requirements of the franchisor without putting you overly in debt is what it’s all about of course. And if you do it right then you of course have the potential to grow a business, profit from it, and build owner equity for either long term resale of personal financial gain. That’s simply what it’s all about, and boy does it help if you like what you are doing, at the same time taking on the entrepreneurship role in Canadian business.

The good news is that your are lucky, because franchising couldn’t be any hotter or more popular. Franchises move goods and services in the billions in Canada, and you’re now part of that movement.

But let’s be realistic, whether it’s a franchise investment of any other business start up the same critical needs apply relative to planning and financing.

Homework. Did you hate it in school? Well here it is again because we strongly suggest to clients that you are now in homework mode when determining how financing a franchise works. It’s all about planning, which includes ensuring you have a profitable potential business on your hands, as well as understanding ways to finance a franchise in Canada.

Business plans are critical to your franchise investment. It’s a case of demonstrating your business has both profit potential plus, and this is what interests the lender, that you have the ability to repay your debt and loans. The franchisor naturally is interested in long term success of the chain, and your ability to pay royalties as they become due, usually monthly.

When you address the franchise finance decision you must consider a number of items – they are as follows – what is the total all in cost, what methods are available to finance each part of the cost breakdown, and finally, and perhaps most importantly, how is the actual financing done.

The costs to assess in a franchise finance investment are as follows – the initial franchise fee, the cost of fixed assets or leaseholds to your business – i.e. equipment, signage, vehicles if required, etc. And finally, if you did all that and didn’t address working capital for ongoing operations and growth then you are setting yourself up for failure.

Clients are always looking to us for a magic solution and a one stop finance strategy for their franchise investment. The closest we can come to that is the government BIL/CSBF loan, under which the majority of franchises are financing in Canada. You can successfully augment this strategy by equipment financing for a variety of assets as well as a small working capital loan, usually unsecured. Don’t forget also that your own owner equity investment becomes the final piece of the puzzle

Why Business Is Grateful For Equipment Leasing and Financing and Asset Finance Solutions!

Many Canadian business owners and financial managers are under the impression that equipment leasing and financing solutions for their asset finance needs are more expensive than other forms of financing.

However, at the same time thousands of businesses everyday flock to the lease finance solution when they are acquiring equipment. How can a finance solution perceived as ‘ expensive ‘ be one of the most sought after business financing facilities day after day.

It’s because it’s all about the benefits and flexibility. In pure theory if you were paying full price cash or entering into a term loan you could make a technical financial case that lease financing is more expensive.

But it’s never always about price in your personal life, and that’s certainly the case in business. The reality is that the additional benefits of a lease often over weigh any concerns about cost or interest rates. And quite frankly with interest rates at all time lows in Canada companies with fairly decent credit profiles can get equipment financing in the 7-8% range. And, on top of that, if your company doesn’t have a pristine credit profile you still can get approved because Canadian equipment and leasing and financing professions are experts in asset finance, and a lot of emphasis is placed on your company prospects and the asset itself.

Accounting isn’t one of our favorite subjects when clients ask us for leasing assistance, but the reality is the when you use lease finance effectively – for example operating leases, then you are in a position to increase overall return on assets and your banker or other senior lender isn’t overly concerned about that always omnipresent debt to equity ratio he or she is talking about.

When clients talk to us about leasing we can talk about ten or 15 different issues – but to be honest they only often have one – can we get approval for a rate, term and structure that makes sense for our firm? That’s the essential question more often than not. And that’s more often when lease finance steps up to the bar! Lessors take, on balance greater credit risk than financial institutions, and in our words, they are more likely to ‘ buy into your story ‘ – whether that be a turnaround year, a new project coming up, etc.

Lease decisions from your point of view are often driven by the simple question – can the acquisition of this asset grow sales and profits. Asset finance firms understand that and they essentially become your business partner with the additional capital they put into your equipment financing needs. You on the other hand can use that additional cash flow and working capital for general operating purposes. You have matched long term debt – i.e. the lease, with long term capital – your lease finance strategy.