The Secret of Franchise Financing Loans

It’s appealing, we know that. It’s the idea of owning your own business that is a proven brand and money maker. Franchise financing loans can help you address your entrepreneurial vision of owning a franchise in Canada. The ability to own your own business and generate profits and wealth is of course appealing to all.

Picking your franchise in some ways is half the battle, as you probably have been focused on purchasing a new or existing franchise that matches your skills, interest, and experience. The other half of the battle and some say the harder one (we would agree) is arranging franchise financing loans that make sense for your business and your own personal situation.

As we point out to clients, whether entrepreneurs are starting a major manufacturing company that might employ hundreds, or a pizza shop with a staff of three two considerations come to mind, always – they are debt and equity. We’re of course referring to how much you will put into the business, and how much business credit for a franchise loan can be accessed.So are there some great secrets and tips we can share with yourself as a prospective entrepreneur – there sure are.

First tip/secret # 1 is simply to investigate carefully the financial requirements that your franchisor requires. These must be addressed in a solid and dedicated manner. If you don’t understand the requirements how can you address them? So ensure you understand the amount of financing the franchisor recommends. Is that all? Definitely not, that’s where our previous concept of planning was mentioned. Make sure you consider two other aspects of the business financing; they are working capital for daily operations, and some sort of plan for long term growth or expansion.

It’s probably not written in stone somewhere, but we have always felt that clients aligning themselves with a major brand that has a larger number of multiple units have a strong chance of financing success. Of course that isn’t always the case, as some new concepts in a number of industries continue to be introduced all the time, but it sure helps if the lender is enamored by the franchisors brand and success.

Another great tip and secret is simply that as opposed to spending all the time on the business itself when you are discussing financing, rather also focus on your own personal financial situation and experience. This is absolutely one of the most important criteria that banks pay attention to – namely how have you run your personal affairs, and at the same time do you have the type of business of management experience.

Some franchisees think because they don’t have very direct experience it might hinder their financing – the reality is by properly positioning your skills in a general sense, i.e. previous sales experience, customer service, etc you can capitalize on general business skills required to run any business.

You may not like to hear the news, but the reality is that you do in these times need a sizeable personal investment into the business, aka your owner equity. Those typical ranges between 30-50% depending on the size and nature of your franchise. In some cases you might be in fact buying an existing franchise from another franchisee who wishes for some reason to ‘move on.Let’s share probably our greatest secret in financing your franchise – the government of Canada. Many clients are surprised to hear that a government program known as the CSBF / BIL program is the largest financier of franchises in Canada. Its underwritten, structured, and supported by the government and offers great rates, terms and structures for amounts up to 350,000.00 – that amount was increased from 250k in previous years.

A final secret – experts are preferred – Speak to a trusted, credible and experienced Canadian business financing advisor on how you can efficiently and successful gain knowledge on franchise financing loans for your new business.

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International Banking and Offshore Finance for the Rest of Us

In a media storm of: “big bad corporations shelter billions in offshore tax havens”, one would think that you either have to be a “big bad corporation” or a “money-grubbing 1%’er with an overwhelming penchant for hiding money” in order to have an offshore bank account. Nothing could be further from the truth. Nearly anyone can and should utilize the services of an offshore bank.

Why would you want to keep your money in an offshore account you say? One of many reasons could be concern for domestic bank stability, and unless you’ve been under a rock for the last several years, you are likely more than a little weary of domestic bank stability. And as of January 2013, the FDIC is rolling back coverage on individual accounts to a cap of $250,000. This is likely not an issue to most of us, but what’s the bigger picture here? What does this say about the solvency of the FDIC? How many near-simultaneous bank failures will it take to bankrupt the FDIC completely? What other policy changes are there that could; in the event of multiple bank failures, effect your hard-earned life savings?You’ve heard about diversifying your assets, between stocks, cash, and hard assets such as gold and silver, but what about diversifying your banks? I’m not talking about opening an account at your local Savings and Loan and an additional account down the street with Citibank, I’m talking about diversifying your banks in different countries. Don’t worry, I’m not suggesting you head out and convert half of your life’s savings to Icelandic Krona, you can keep your money in US Dollars, just don’t keep those US Dollars in a US Bank. Think about it, you wouldn’t keep your entire life’s saving in one company’s stock, or one mutual fund with one investment company would you? At least I hope you wouldn’t! (Bernie Madoff Investment Securities ring a bell?)

Many international banks offer great lines of product with fantastic rates of return designed specifically to attract depositors with US dollars that just don’t exist domestically. Many of these programs are only available to account holders. Even if your credit rating has taken a beating in recent years, you may still be eligible for mortgage financing from your offshore bank when domestic banks won’t even look at you. Granted, the money may be pricey and may have steep equity requirements, but when no domestic lending institution will even give you the time of day… any financing is better than no financing.

There are inherent risks with having your money in an offshore bank so take your time, do your homework. Just as you wouldn’t put your money in a domestic bank that appears unstable, or is on the FDIC list of troubled banks, you probably would be well served to stay away from banks like the First National Bank of the Democratic Republic of the Congo. No matter what fantastic rate they offer you! Find a good bank, in a good jurisdiction. Want to know why Swiss banks look so attractive to wealthy account holders? You would think from listening to the talking heads on the major network nightly news programs it would be hiding money… think about that one for a moment: Would you consider a place that has been demonized on the nightly news year-in and year-out; and that is known by absolutely everyone, a good hiding place for money? So what makes you think these wealthy account holders aren’t using the same logic? They didn’t become wealthy by making mistakes with their cash, that’s for sure. The number one reason for using a Swiss Bank is simple: they’re really good at banking. In fact, they’ve been doing it for longer than the US has been the US, and are rock-solid stable. In fact, when was the last time you heard of a Swiss bank failure, collapse or a call for a bailout of the Swiss banking system?And what about staying out of trouble with the IRS? Guidelines change all the time, so be sure to check, recheck and understand them thoroughly before sending your money to a foreign bank account. If you follow the guidelines, do your homework and report your offshore holdings, you can enjoy your offshore account hassle free for many years to come!

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Your Finances Don’t Have to Give You a Headache!

Most people will admit to letting their eyes glaze over whenever somebody starts to talk about financial issues. This is because talking about investments and using words like “fiduciary” is only exciting to a select few. With the current economic crisis, however, more people want to learn about finance and how to take control over their household finances and money issues. Here is the good news: your finances don’t have to give you a headache!

Admit it: whenever the latest stack of bills arrives in the mail you get a tiny but sharp pain right between your eyes. Are you one of the people who tosses the pile in a corner or drawer of your desk and vows to “get to it later, it’s just too much to deal with right now”? It’s okay if you are. This is how a lot of people react to their bills. The good news is that getting your finances under control isn’t hard.First you need to get all of your bills together. Would it surprise you to know that most people do not keep track of how much money they spend on bills each month? This one detail is the reason that so many people find that keeping track of their spending is such a struggle!

Once you’ve gotten all of your bills together, start calling the companies that you owe money to and ask them to change your due date. The goal here is to get all of your bills due on the same day. This will help you with your budgeting and making sure that your bills get paid on time. If your bills are all due at the same time, you have an “end goal” in place-for a certain amount of money to be in the bank and a day to drop everything at the post office.

You should always pay at least ten or fifteen dollars more than the minimum payment on each bill. This is because a considerable amount of your payment is probably going to your interest rate and while you might be paying fifty dollars or more every month, it is entirely possible that only ten of that is going toward the actual balance of your account.You should also keep track of your spending for a month-don’t worry about learning how to cut back today. For a month keep all of your receipts and then add them all up. Look at how much money you are spending on groceries, entertainment, fast food, other things, etc. Once you’ve got a running tally, look at the ways you can cut down! It is a lot easier to figure out how to save money when you know how you are used to spending it.

Finances aren’t difficult-at least, they do not have to be. It is mostly about paying careful attention to how your money leaves your possession. Once you know that, figuring out your finances is easy!

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Construction Finance and the Problem With Banks

High street banks are often the benchmark for clients looking to borrow money. This is true of personal mortgages, loans and no less so for funding building projects. Most would agree that they provide the cheapest rates and all builders and developers are looking for the cheapest construction finance.

The problem is that for most clients the high street are simply not an option at the moment, and from news I have had, nor will they be for the foreseeable future. I have dealt with clients who should be able to obtain bank funding, having clean credit, a good track record and years of experience in the sector. They are still being declined for various reasons, such as the loan amount is too low, the type of build is not what the bank wants, they have other loans that would need to be repaid first – the list goes on.However, just because your current bank will not give you construction finance does not mean that there are no options available to you. It does mean though that you should not judge quotes we, or others give you, on the basis that the rate of interest or fees might be more than you are used to or were expecting.

Off high street lenders are NEVER going to offer building finance as cheap as the big banks. They are specialists filling a gap in the market, and to be frank, they know that your options are limited. Lenders such as this are mostly funded by investors who want to see a return on their money and the lender themselves need to charge a margin to stay in business. The market has set the rates that others are prepared to pay and so you have a stark choice – pay the higher rates or do not borrow the money. For those that are cash rich there is no issue but for the majority that want to leverage their capital it is the difference between building or not building.

Of course, paying more for the construction finance means less profit for you, the developer, but it does mean you are making more profit than not doing any work at all. If you cannot get a project funded at a high street rate then the rates you have in mind or might want to pay are not applicable for comparison. A bank may have given you funds at 1.5% above base in the past but that is irrelevant now. The past is not today.

The fact that building finance is available is good news but now is as crucial a time as ever to use a broker with experience and knowledge of the market. Making the wrong choice could cost you thousands in unnecessary fees and interest.Going through the internet looking for lenders directly is possible, of course. But how long will that take you? Hours or days? How do you know they will be the best fit for your project? Will they give you all the information you need day 1?

Working with an experienced broker can make the process much easier as they will have a real understanding of how each lender works, the process they go through and what costs you can expect, before you get too far into an application.

So, construction finance is out there but for your own sanity don’t automatically compare it to what you are used to and what you think should be available.

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