Is it easy to get a business loan for a franchise in Canada? The strategy you employ is important. Most people want to succeed within a short period by developing a finance plan that works for both the franchise and the company.
Franchises were affected by the global financial crisis but now, they are back on their feet. So, can you get financing and how to go about this?
The first step is to find a strong franchiser and form a partnership with them. In this partnership, you will act as a subcontractor, meaning that you will be the franchisee. You need to prepare and present a sound financial package, so that both the franchiser and potential creditor are convinced that you are worth the financing. What should this package or plan contain? The following components are required: an overview of your background and experience, of the business of your partner, and a plan on how to achieve a profit. The lender will also require information on how much cash you will have for the loan repayment. You have to come up with a plan about how you will generate it. Providing indicators that you will make a profit is not enough. You may get support in the process of obtaining financing but for the most part, you will be on your own. The franchiser is there mostly to give you know how for the fee they ask.
You have to calculate your starting costs, including the hard and soft costs. The latter include non-tangible assets such as the franchise fee.
You should present the amount of money to be contributed to the business. The minimum is 10 percent, the maximum - around 40 percent. In Canada, the BIL/CSBF program, a government-backed loan program, does the biggest portion of franchise financing. It is a good idea to apply under this program because it offers very lucrative market interest rates, 5-7 year loan return terms, and no penalty on early repayment. You will not be required to back up the loan amount with collateral or other personal assets and funds.
Regardless of the franchise loan you are applying for, a decent credit history will be a requirement.
In Canada, another prime lender with respect to franchise loans is TD Canada Trust. This establishment offers a wide combination of banking products and services, long branch hours, and fast and efficient services. Clients are offered business lines of credit, up to $250,000 in CSBFA loans, overdraft protection, flexible repayment terms and conditions on business loans, financial counseling, and more. CIBC is another financial establishment that offers franchise financing to businesses in the process of conversing their corporate stores into franchises and that have owner-run distribution systems. Applicants should present a strong balance sheet and have franchise requirements of more than $250,000.
Franchises were affected by the global financial crisis but now, they are back on their feet. So, can you get financing and how to go about this?
The first step is to find a strong franchiser and form a partnership with them. In this partnership, you will act as a subcontractor, meaning that you will be the franchisee. You need to prepare and present a sound financial package, so that both the franchiser and potential creditor are convinced that you are worth the financing. What should this package or plan contain? The following components are required: an overview of your background and experience, of the business of your partner, and a plan on how to achieve a profit. The lender will also require information on how much cash you will have for the loan repayment. You have to come up with a plan about how you will generate it. Providing indicators that you will make a profit is not enough. You may get support in the process of obtaining financing but for the most part, you will be on your own. The franchiser is there mostly to give you know how for the fee they ask.
You have to calculate your starting costs, including the hard and soft costs. The latter include non-tangible assets such as the franchise fee.
You should present the amount of money to be contributed to the business. The minimum is 10 percent, the maximum - around 40 percent. In Canada, the BIL/CSBF program, a government-backed loan program, does the biggest portion of franchise financing. It is a good idea to apply under this program because it offers very lucrative market interest rates, 5-7 year loan return terms, and no penalty on early repayment. You will not be required to back up the loan amount with collateral or other personal assets and funds.
Regardless of the franchise loan you are applying for, a decent credit history will be a requirement.
In Canada, another prime lender with respect to franchise loans is TD Canada Trust. This establishment offers a wide combination of banking products and services, long branch hours, and fast and efficient services. Clients are offered business lines of credit, up to $250,000 in CSBFA loans, overdraft protection, flexible repayment terms and conditions on business loans, financial counseling, and more. CIBC is another financial establishment that offers franchise financing to businesses in the process of conversing their corporate stores into franchises and that have owner-run distribution systems. Applicants should present a strong balance sheet and have franchise requirements of more than $250,000.
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