Capital Access

 

In the wake of the severe economic downturn, IFA called on the federal government to take action to ease frozen credit markets. Since then, IFA has delivered the fundamental message that in times of economic stress, franchising gives small businesses an extra margin of help through access to training, business methods, and marketing support provided by the franchisor. Providing franchised businesses access to capital by improving operation of secondary markets will ensure that small businesses are positioned to help spur economic growth.

Franchising thrives when capital flows freely from commercial and U.S. Small Business Administration (SBA) guaranteed lenders to qualified franchise borrowers. For every $1 million in lending to a franchise, 40 new direct and indirect jobs are created. Although the flow of credit has increased in recent years, a 4.4 percent lending shortfall between franchise demand and credit available still exists. IFA supports maintaining current funding levels for the SBA 7(a) and 504 loan programs and encourages regulators to continue to ensure access to these loan programs for qualified small businesses, especially given franchises are responsible for 7 percent of SBA loan dollars and 11 percent of SBA loan volume.

Elizabeth Taylor, Vice President of Government Relations, Public Policy & Counsel at etaylor@franchise.org.

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