IFA and CBA launch the Lending Accelerator tool to expedite small business loans to the franchise sector



The International Franchise Association and the Consumer Bankers Association today unveiled the Franchise Small Business Lending Accelerator, a new tool to expedite small business loans to the franchise sector. The Lending Accelerator has been incorporated into the Franchise Registry website www.franchiseregistry.com and will provide both SBA and conventional lenders with powerful new capabilities such as detailed underwriting information on more than 3,000 franchise brands and lender business development tools to find suitable franchise brands and franchisees

The Lending Accelerator tool was developed in collaboration between members of the IFA and CBA as part of a private-sector campaign to educate both the financial services industry about franchise lending and franchise borrowers about the challenges facing banks in a new regulatory environment. “The Accelerator will alter the way franchise lending is done, increasing the flow of capital to franchising and leading to much-needed growth in the small business community,” said President and CEO Steve Caldeira during a preview of the new tool IFA hosted for members of IFA, CBA and the media. . “For the past 18 months we have worked together to address capital access issue, responding to our members first with a lending summit in April 2011.” 

Richard Hunt, President and CEO of the Consumer Bankers Association knows from a lending perspective that the last four years have been challenging for banks looking to make good loans to qualified borrowers.  The new Small Business Lending Accelerator will bring positive signs for improved small business lending. “Lending is all about accessing the risk. Franchising has a unique attribute that non-franchised small business lack: Performance history of many similar types of small businesses that can be used to determine credit risk,” said Hunt. 

The Lending Accelerator was designed to have better information reaching more lenders which will produce greater high-quality small business loans.  The Franchise Registry has been providing thousands of SBA lenders with franchise eligibility information for more than a decade.  Joe DiNicola, Line of Business Executive, Preferred and Small Business banking, Bank of America, who has been in banking for more than 20 years and has never seen a more useful tool explains that “the Franchise Registry contains information on all franchise brands in the U.S.” 

Darrell Johnson, President and CEO, FRANdata, who manages the Franchise Registry website, knows that this capability, “will set franchising apart from all other forms of small business lending because of the greater insight a lender will gain.” Even though SBA lenders have been using the Franchise Registry to determine whether specific brands are eligible for SBA lending for 14 years, significant information has been added that will help all types of lenders determine the credit risks that each franchise brand represents.

“Better information provides the foundation for better credit decisions and goes a long way towards helping lender make more loans,” said Mark Luppi Executive Vice President and Head of Business Banking, HSBC N.A.

Franchisors are excited about how the impact of the new tool will give lenders solid credit-based information they really need.  Paul Pickett, of Wild Birds Unlimited believes that by, “putting these tools into lenders hands in a protected environment is a relay big step forward.”  

Franchisors know that this couldn’t come at a better time, as capital access is a big issue and has slowed the ability of almost all franchise brands.  Dick Larson of Papa Murphy’s knows that “giving lenders relevant third party information is a true game changer.”