IFA Calls for Secretary Geithner, Congress, to Reverse Job-Killing Financial Regulations on Small Business

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Alisa Harrison, 202-628-8000
Matthew Haller, 202-662-0770



aharrison@franchise.org


mhaller@franchise.org


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Regulatory Uncertainty Causes 20 Percent Lending Shortfall on Franchise Industry in 2011





WASHINGTON
,June 21-The International Franchise Association, in advance of tomorrow’s House Small Business Committee hearing entitled,
The State of Small Business Access to Capital and Credit: The View from Secretary Geithner,called on Secretary Geithner and others to reverse financial regulations that are causing significant uncertainty in the lending environment, thereby strangling the ability of small businesses to access credit and also stifling our ability to create jobs. 



“F
ranchise businesses can create jobs quicker than any other industry, as demonstrated by the industry’s 40 percent growth rate over the past decade, if they can gain adequate access to credit,” said IFA President & CEO Steve Caldeira. “We urge Secretary Geithner and lawmakers to consider reversing burdensome financial regulations that are creating significant uncertainties in the credit markets, which are holding back franchise small businesses ability to access capital necessary to create jobs.” 



Surveys indicate that financial regulatory reform is having a crippling effect on lending to small businesses. In fact, the commercial lending market to small franchised business has stalled. IFA estimates that the credit gap this year will be over $2 billion. If the gap was filled, franchise businesses could create 332,000 jobs by the end of 2011. 



In a grassroots action alert to the organization’s full membership on Tuesday, IFA called on policymakers to redirect the $30 billion Small Business Lending Fund, included as part of the Small Business Jobs Act of 2010, to proven and successful programs, such as the Small Business Administration (SBA) loan guarantee initiatives. IFA strongly supported the Obama administration’s efforts to include higher SBA loan guarantees and loan limits in the law. 



IFA has also called on Congress to examine capital reserve requirements and regulatory scrutiny by the FDIC, the Federal Reserve and the Office of Comptroller of the Currency (OCC) that may be unintentionally, unnecessarily and harmfully holding back credit access by small businesses. Lastly, IFA is asking Congress to examine how SBA loan guarantees are considered by financial regulators, including holding additional hearings such as the Geithner hearing on financial regulation and small business credit flow. IFA testified earlier this month that regulatory hurdles facing the financial industry are holding back the franchise industry’s ability to open new establishments and create jobs. 



According to testimony submitted by Bill Hall, CFE, CEO, William G. Hall & Company, franchisee of Dairy Queen International and chair of the IFA Credit Access Taskforce, to the House Small Business Committee on June 1, “If regulators are inconsistently evaluating SBA loans, it may discourage or even prevent banks from lending to small businesses, despite Congress’s intent to expand credit access.” 



“We urge lawmakers and the Administration to stand up for small franchised businesses and reverse regulations that are clearly restricting credit flow to small business,” said Caldeira. 

 

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About the International Franchise Association

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating 50 years of excellence, education and advocacy, IFA protects, enhances and promotes franchising through government relations, public relations and educational programs. Through its awareness campaign highlighting the theme,
Franchising: Building Local Businesses, One Opportunity at a Time,IFA promotes the nearly 18 million jobs and $2.1 trillion of economic activity generated by franchising. IFA members include franchise companies in over 90 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

 

 

 

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