Monthly Archives: November 2017

When Entering Into a Franchise Financing Loan

Many Canadian would be entrepreneurs and business owners find that financing a franchise is often as challenging (if not more so) than the process and work and due diligence in selecting the right business to purchase.

Lets share some hands on, ‘real world’ advice and tips on franchise finance in Canada. Fantasy might often work for you, but NOT in business financing!

Business financing is a challenge on any level, major corporations wrestle with it everyday, and you are wrestling with it as you contemplate your new business venture. Naturally all our comments and advice relate to both a new franchise or your purchase of an existing business that is being sold by a franchisee.

A lot of franchises would do well to understand how the franchise industry is regulated in Canada and what types of disclosure and protection are in place for both you, and, to be fair, the franchisor. Those rights and obligations you have are under something called the ‘Arthur Wishart Act’ if you are in Ontario – other provinces have similar legislation. We strongly recommend that you look at the Act, and quite frankly your lawyer might be the best one to do this.

Clients always ask us what rate they might be expected to pay on a franchise finance loan in Canada. We are very clear on that, and the answer is ‘ it depends ‘! Would a rate in the 5-6% range sound good to you. We certainly think it does given you are a small business and in many cases viewed as a ‘start up ‘, notwithstanding your franchisors depth and reputation. That interest rate is available to you through a loan technically known as the BIL loan, also called the CSBF loan. Lay people call it the government Small Business Loan, and it is categorically the way in which a majority of the franchises in Canada are financed. Speak to trusted, credible an experienced advisor in this area of franchise finance who can successfully complete this financing for you.

Is a BIL franchise loan the only way to finance a franchise? Definitely not, other alternatives include a cash term loan, equipment financing for any hard assets in the business, and the final piece of the puzzle, which is your own owner equity or cash investment into the business. All business is financed by borrowing (debt) plus the owner equity contribution.

Can you get a franchise finance loan without any personal guarantees – the quick tip and answer is ‘ no ‘, we don’t think so, but we also point out to clients the aforementioned BIL loan requires only a 25% personal guarantee.

Clients always ask if a franchise can be financed with no down payment – here’s our quick tip on that – No, absolutely not. Whether you are financing a pizza franchise or building a car mfg plant any lender in North America will look to some owner financial involvement in the project. The balance act becomes how much, as there are pros and cons of putting down too much or too little equity.

Can you purchase a franchise without some thought around a business plan – we don’t think so, and info act the best tip we can give you is to do a business plan, and if you aren’t preparing it personally at least stay involved in the input and the process. It will steer you towards a common sense level of financial success in your business.

Prospective franchisees are always asking if an appraisal is required. Generally it is, but the biggest tip we can give you in this area is that the modest cost of an appraisal can actually be the largest financial benefit to your franchise financing, as it has the ability to increase lender confidence and lower your estimated personal financial commitment to the business.

Franchise finance has many small twists and turns along your process – investigate financing options thoroughly and our tips should help you to minimize personal risk and maximize the financing of your business.

Commercial Vehicle Finance Loans

Commercial vehicle finance loans are something that many businesses look into for a variety of reasons. Office based jobs will sometimes give company vehicles to particular employees as an added benefit. This is especially true if there is an outside sales staff or a need for the employees to make visits to clients outside of their base of operations. Instead of utilizing the employee’s personal vehicle and compensating for mileage, the company will supply a company vehicle and apply for commercial vehicle finance loans to stock the employees with company cars. This is sometimes better for the image of the company, can help keep costs down and assist with branding. Commercial vehicle finance loans are also used when purchasing vehicles for delivery of freight. Any business that deals with the shipping and delivery of wares should look into commercial vehicle finance loans.

A company with an upscale image may purchase vehicles for employees that portray a particular image. A commercial vehicle finance loan can help accommodate this need by allowing the company to purchase several high end vehicles for company use. Because maintenance and mileage on an employee’s individual car can be expensive, the company can regulate those costs by supplying a company vehicle. The commercial vehicle finance loan amount will be known and it will be easier to budget for that expense. Branding can also be used when purchasing cars through a commercial vehicle finance loan. Often vehicles are branded with the logo and a possible slogan so those who are traveling and see the vehicle will get brand recognition. The use of a commercial vehicle finance loan to purchase these types of vehicles will often help increase sales revenue by increased exposure to the brand name.

Commercial vehicle finance loans are very similar to personal loans. Often there is a need for a down payment and then monthly payments are made on the note for the total cost of the loan. The advantage of the commercial vehicle finance loan is that companies can make a larger loan with the assets as collateral. This way, larger items such as trucks can be purchased and many vehicles can be purchased at once. Commercial vehicle finance loans are available for outright purchases as well as leases. Commercial vehicle finance loans used for leasing vehicles are typically used by companies that want to keep newer vehicles and trade them in every few years. Using a commercial vehicle finance loan for sale or lease of vehicles to be used in business will help companies keep a set amount of money budgeted yet allow the company to have a fleet of cars or trucks at their disposal.

A Finance Loan to Fit Your Needs

When money runs short, you may find yourself wondering exactly how you’re going to get the cash that you need to do the things that you either need or want to do. One of the easier solutions to this problem is to apply for a finance loan… a structured loan that allows you to make payments on the item that you’re wanting to purchase or the amount that you need to pay.

Not every finance loan is created equal, however; it’s important that you take the time to look at all of your options and carefully choose which finance loan is the one that’s right for you. By considering all of the options that you have available and comparing the features and rates of different finance loan offers against each other, you should easily be able to find the loan that best fits your needs while staying within your budget.

How Financing Works

If you’re going to take out a finance loan, the first thing that you need to know is exactly how financing works. Basically, when you finance a purchase then you’re taking out a secured loan that covers the cost of whatever item you’re purchasing minus any down payment that you make, or the value of a trade-in for vehicle purchases where trade-ins are allowed.

There may also be some additional fees associated with your purchase, and these may or may not be covered by the amount of the finance loan it depends upon the nature of the loan, the amount and purpose of the fees, and the lender that you’re using for the finance loan.

About Collateral

When making a purchase with a finance loan, the item that you’re purchasing is generally used as collateral to secure the loan. This means that there is no additional collateral required… but it also means that whatever you’ve just purchased comes into your possession with a lien on it that grants legal rights to the lender.

Should you fail to repay the loan as promised, the lien holder can take possession of the item and place it up for sale in order to recover their lost money. This is only done as a last resort, however, and once the loan has been fully repaid then the lien is removed and you gain full ownership.

Looking at Your Options

Since most finance loans are used to cover larger purchases and you’ll likely be paying interest on the loan amount for several years, it’s important that you take a little bit of time beforehand to explore your various lender options so that you can find the lender that’s best for your financial needs.

You should consider a number of banks, finance companies, and other lenders in your area, as well as a variety of online lenders. Request loan quotes from all of these lenders, so that you’ll be able to stop and compare the different offers and determine which loan is really the best one for you.

Choosing the Right Loan for You

When comparing finance loan quotes, it’s important that you compare not only the interest rates that are offered with each but also the terms of the loan and any additional fees associated with borrowing the money or purchasing the specific item.

Financing Loan

When talking of financing, it means you borrow money to pay for something that is valuable or has value. So a financing loan can be used by a person borrows money to financial institutional or bank. There are many types of loans, there is car or auto financing, home financing, business financing, student financing, etc.

When you are looking for financial institution to have your loan, it’s more important that you get the right reputable lending institution that will give you an access to a suitable loan. Every lending or financial institution has different terms in payments and has different interest rate as well.

The most common loan is the car, the business loan and student’s loan. For businesses, they might have financing loan to expand their businesses or need more funding to their capital. People who want to have a car can also avail the financing loan as well or people wants to have a house of their own. And if you want to go on with your study and lack of money, you can also avail this type of loan.

Financing loan has a higher interest rate compare to regular loans and one must be aware of that although there are some that offer low interest rate but that financial institution is you need find. That is why the best way to get the lowest interest rates on loans to shop around, get quotes and compare.

You can also find loans online through the internet where in you can get a free quote with easy access and convenient. Remember that in finding the reputable financial institution, one should be careful because even in the internet, there is still scammer. Shopping online is good for window shopping only and asks for free quotes since you cannot see personally the person online unlike when you go to their office.

Borrowing for small amount of money, financing loan is not appropriate since you can borrow that to your relatives or friend without interest. What is important is that you have to pay what you borrow in due time. Going to financing loan for just small amount of money is not practical at all since you have to pay for the high interest rate.

What is important when you go to financing loan, be sure you have a good credit record for them to accommodate you. Loan is good if you get profit from it and this is good for businesses and as well for home loan. Good planning is needed when you want to have a financing loan. Study it well and have some idea before getting a loan.

Most of the financing loan, they ask for an asset or collateral to be sure that if ever you cannot pay your loan, they have something to pull out and sell it to gain back the money you borrow. To borrow is easy but to pay back is hard since you don’t know what will be your future takes. So think it over wisely before getting a loan.

Think why other financial institution accept bad credit rating to have loan from them, it’s because the profit they will get is bigger, aside from the high interest rate, if you cannot pay on expiry date, they have to pull the asset which is the collateral and they have the power to do that. That is why one should read carefully the term and conditions before signing.

Getting A Business Financing Loan

Business financing loans are a line of credit which help people who are in business. There are different kinds of business financing loans that are offered to different lenders either to raise funds or loan capital to your business in order to expand your company.

Although there are many ways also to finance your business and one should have sufficient cash flow within the existing business you have so that the lender will be able to finance the growth of your company by its own means or you can turn to a bank or other financial institutions that can provide different variety of loans.

Having a business financing loan is not as easy since they have some criteria or financing programs where in you meet the following criteria such as:

  • Your business must have commercial customers
  • Your business must be established and must have consumers or customers.
  • They don’t finance on real estate projects

Some of the business financing programs:

  • Business are available of every size
  • Easy to obtain
  • Have many advantages over conventional business loans
  • Can be set up in a few days

There are some business financial loans that don’t require you to have a good personal credit or showing countless financial statements since their financing program or loan allows being flexible to help your business grow but before looking for a business financing loan, you need to know how business loans work and used.

You can see that there are many sources of financing loans that are geared to types of businesses but the sources have certain criteria for investment and loan but that depend to the area which they participate.

These are some of the areas of Business Financing Loan:

  • Commercial Property
  • Start-up Financing for business
  • Loans for Government
  • Purchase Order Advances
  • Leasing Equipment
  • Commercial Financing
  • Invoice Factoring
  • Asset Sales Leaseback
  • Investment Banking
  • Angel Investor s which is known as informal investor
  • Venture Capital known as Private Equity Capital

But private money business financing loan is different since it includes equity loan, hard money as well as private money loans. They limit only to small business investment companies, private investors, business angels, ventures capital firms and commercial lenders.

The loans have two types for you to choose when in regards of terms in payment. There is the short term and as well as long term which suits your budget and you will notice also that there are lots of commercial lenders, business loan brokers and business financing companies had gone out of business due to global crisis and many people were having loans anywhere and everywhere in order to survive.

If you need financing for your business, you need to plan and study hard of it since financial institutions requires business plan that includes detailed start up cost, marketing plans, monthly expenses, projected profit, etc. Remember that having a business one should do hard work, passion, and determination and have dedicated workers who desired to have the business of their boss grow with success.