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IFA SUPPORTS BILL TO IMPROVE SMALL BUSINESS LENDING PROGRAMS
WASHINGTON, Oct. 27, 2009—The International Franchise Association lent support today to H.R. 3854 introduced by Rep. Kurt Schrader (R-OR) that would make important improvements to small business programs to increase access to credit for franchise businesses.
“IFA supports H.R. 3854, the Small Business Investment and Financing Act,” IFA Vice President of Government Relations David French said in a letter House Small Business Committee Chair Nydia Velázquez (NY) and Ranking Member Sam Graves (MO). “This legislation will go a long way towards updating and improving Small Business Administration loan programs so that more prospective franchise business owners can obtain the necessary capital to help lead our economy on a road to recovery.”
French said that H.R. 3854 streamlines the bureaucratic process of obtaining an SBA backed loan, provides lenders greater certainty of the guarantee, makes the Secondary Market Lending Authority permanent and prohibits alternative approval standards for loans used to finance goodwill. The legislation will also increase the size of business stabilization loans to $50,000, which will assist many existing small firms who are struggling to make payroll, pay off debt or finance inventory.
In addition, the introduction of H.R. 3854 comes less than a week after President Obama and SBA Administrator Karen Mills expressed support for changes in small business programs, including an increase in the SBA loan limit from $2 million to $5 million. While H.R. 3854 proposed to increase the maximum loan to $3 million, IFA urged the committee to consider further increasing the limits as proposed by the Obama Administration.
“The IFA strongly urges Congress to consider further increasing the loan limit in this legislation from $3 million to $5 million. There are over 400 different franchise brands in the United States that have an average initial investment requirement of $750,000 to $2 million per unit. These franchised small businesses reach the SBA’s current loan limit of $2 million by the time they want to build the second or third store,” French said. “By increasing the loan limit, at an annual growth rate of five percent, these businesses could create 450,000 to 650,000 new direct and indirect jobs within the next 12 to 18 months.”
French also told the committee that IFA is concerned that while H.R. 3854 increases the maximum loan amount, it does not increase the amount of the guarantee.
“The American Recovery and Reinvestment Act temporarily increased the loan guarantee rate to 90 percent,” French said. “The IFA recommends that until the economy recovers, the 90 percent guarantee rate established by the ARRA be extended commensurate with the new maximum loan limits in H.R. 3854.”
For a copy of the letter the House Small Business Committee click here.
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About the International Franchise Association
The International Franchise Association, the world’s oldest and largest organization representing franchising, is the preeminent voice and acknowledged leader for the industry worldwide. Approaching a half-century of service with a growing membership of more than 1,100 franchise systems, 10,000-plus franchisees and more than 500 firms that supply goods and services to the industry, IFA protects, enhances and promotes franchising by advancing the values of integrity, respect, trust, commitment to excellence, honesty and diversity. For more information, visit the IFA Web site at www.franchise.org
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