Franchisers, Lenders Huddle at Denver Lending Boot Camp

On Tuesday, the IFA, the Denver Franchise Business Network (FBN), Faegre Baker Daniels LLP and FRANdata hosted a Franchise Lending Boot Camp in Denver to educate franchise leaders and lenders on the ways to increase small business lending in the recovering economy.  According to the Small Business Lending Matrix & Analysis, Vol. 5, produced for IFA by FRANdata in April, lending to America’s franchise businesses will reach $23.9 billion in 2013, the highest level since the recession, yet will still fall short of demand.  Access to capital has remained an important issue for franchise owners throughout the recovery.

 

Stephen Olear, Chief Franchise Council in the Los Angeles office of the U.S. Small Business Administration (SBA), addressed attendees on ways the SBA is working to increase lending to small businesses in general and franchises specifically.  Because of the unique partnerships between franchisors and franchisees, and the stability the franchise model provides, franchise owners generally make good loan candidates.  Olear announced that a new pilot program has launched this year to pre-approve more franchises for SBA-guaranteed loans by making updates to SBA procedures and to the SBA Franchise Registry.  Edith Wiseman, Exec. VP of Client Solutions at FRANdata, spoke about the registry and its role in helping connect franchises and lenders.

olear

Steve Olear of the U.S. Small Business Administration addresses Franchise Lending Boot Camp participants in Denver.

A group of franchisors engaged in a panel discussion entitled: “How We Get Our Franchisees Financed.”  Panelists included Greg Esgar of Massage Envy, Rachel Williams of Mrs. Fields Famous Brands, and Reginald Heard of Focus Brands.  The franchise executives discussed strategies for making their franchisees more loan-ready, and their efforts to help franchisees secure financing during the depths of the recent recession.

 

Following the presentation from the franchisors, a group of lenders shared their insights on what makes great financing candidates, and how businesses can better prepare themselves to apply for financing.  Among the lending panelists were Julie Huston of U.S. Bank, Dave Otteson of BBVA Compass, and Ken Allen of Evolve Bank & Trust.

 

Attendees later gathered for a reception and dinner at the Denver Country Club, where participants mingled and shared what they learned.  Olear again addressed the group to review the progress that has been made in the past few years on increasing lending to small businesses, and applauded the collaboration of the franchise and banking industries in their hard work to improve the lending environment for all.

IFA SmartBrief Brings Franchising’s Story to Life

Eager to learn what is affecting franchise businesses in legislative, policy,
marketing and economic areas? Three times a week, those following the franchise industry can get the latest news in IFA’s news bulletin, IFA SmartBrief. Published every Monday, Wednesday and Friday, it includes such categories as franchise news, best practices and business leadership, news from IFA, trends watch and a policy and finance update.

With a circulation of 25,000, the brief provides tips to help better operate
your franchise business, as well as share the activities IFA is conducting on Capitol Hill to promote the industry and counter policies and regulations that would stifle franchise businesses in their local communities.

The brief, easy-to-ready summaries spotlight what your peers and competitors are doing to expand, update or rebuild their brands. There are many media sources and include major media such as the Wall Street Journal and Los Angeles Times, trade publications include QSR and Adweek and broadcast outlets such as FOX Business News and CNBC. Articles provide tips on taking advantage of social media, improving your credit, listening to customer feedback and more.

Not yet signed up for this free resource?  Visit www.franchise.org and select SmartBrief under “Resources.”

SBA Announces Near-Record Loan Volume in 2012

On Tuesday, the U.S .Small Business Administration (SBA) announced that its loan programs had reached its second-highest total ever for loan dollars in a fiscal year during FY 2012.  SBA reported that its approvals supported $30.25 billion in 53,848 loans to small businesses as a part of its two major loan programs, 7(a) and 504.  The total was only slightly lower than the FY 2011 total of $30.5 billion and much higher than the FY 2010 total of $22.6 billion.

According to SBA, a driver of the lending pace was the temporary 504 refinancing program, which accounted for 34 percent of the $15.09 billion in loan volume in the 504 program.  The refinancing program was a temporary provision under the Small Business Jobs Act passed in 2010, and expired on September 27.

Although there is still a significant demand for small business lending, this news is an encouraging sign that franchise small business owners are getting the capital they need to expand and open new locations.  SBA also reported that nearly 1,300 lenders returned to SBA lending, highlighting the increasing eagerness of banks to support small businesses as an engine of economic growth and recovery.

To read the SBA’s press release announcing the FY 2012 loan statistics, click here.

Dour Economy Doesn’t Sour East Coast Wings & Grill Growth

A seemingly endless lackluster economic climate hasn’t soured growth prospects for East Coast Wings & Grill, which was just approved $7.5 million to provide start-up funding for franchisees entering the system and expansion funding for existing franchisees.  Created by Franchise America Finance and The Bancorp Bank, a subsidiary of The Bancorp Inc., the lending program is the first of its kind.

The franchise’s CEO envisions that the infusion of capital will enable the opening of 12 to 15 stores annually for the next five years, dotting the Southeast with the franchise’s trademark buffalo wings.  “The successful completion of a financing program in this difficult market is a testament to the strength of our business model and an important step in the company’s continued growth,” said Sam Ballas, CFE, CEO of East Coast Wings & Grill.  By the end of this year, Ballas plans to expand 22-unit East Coast Wings & Grill beyond its home state, opening units in South Carolina and Texas.

The lender enthusiastically welcomed its first emerging chain.  “We are very excited to add East Coast Wings & Grill to our lending program as our first ‘emerging’ brand,” said Ronald Feldman, CFE, CEO of Franchise America Finance. “The unit level economics and adoption of industry best practices by management helped us make our decision to offer franchisee financing.”

“Our national program offers the smoothest, most time-sensitive loan approval process available today,” said Nancy Broudo, vice president of franchisee lending of The Bancorp Bank.  The Bancorp Bank has allocated more than $300 million for small-business franchisees and licensees since the program’s inception. “This access to capitalization will enable qualified franchisees to build their business, their industry and an employment base to create jobs.”

The franchise also recently completed its 35th consecutive quarter of same-store sales increases.

The economy can’t zap the zest of East Coast Wings & Grill’s growth trajectory.

 

House Committee Debates Temporary Business Tax Provisions

The House Ways & Means Subcommittee on Select Revenue Measures held a hearing today on the Framework for Evaluating Certain Expiring Tax Provisions.  The Members of Congress questioned several economist witnesses on how to best analyze the value of expiring tax provisions, and by which metrics they should be judged.  Alex Brill, a Research Fellow at the American Enterprise Institute, urged the committee to consider how a certain provision affects the economy as a whole as opposed to only examining the direct impact on the provision’s targeted industry.

The witnesses were unanimous in their dislike of temporary provisions, arguing that they create uncertainty for businesses.  Dr. Jim White of the Government Accountability Office advised the subcommittee to clearly define the goals of each program to determine its permanence.

Aaron Goldstein, the Undersecretary for Housing and Community Development in the Commonwealth of Massachusetts, expressed the importance of continuing many credits before tackling tax reform, as they have a profound impact on the lives of many.  He cited the development of a new hospital in Holyoke, MA that has created many jobs and is an important factor in the revitalization of the city.

Members of the Subcommittee emphasized the need to analyze programs pragmatically and empirically, and stressed the gravity of their task in the greater context of comprehensive tax reform and tackling the budget deficit.