Small Business lending in the United States is beginning to see better days. CFO online reports that domestic banks and U.S. branches are starting to ease up on terms for commercial and industrial borrowers and banks are relieving some of the terms for who qualifies for credit. As pressure to maintain job growth has never been greater to the small business community, the IFA is working to strengthen access to credit and improve partnerships with the lending community.
According to the Fed’s survey, about 58% of the 81 financial institutions surveyed said they cut the spread over cost of funds that they charge borrowers, and 32% said they reduced their use of interest-rate floors. This is a change from January which reported banks lending standards has remained static. Yet with many uncertainties still contributing to a lending shortfall, the IFA is working through its Credit Access Campaign to improve capital flow to franchise small businesses.
According to the Small Business Lending Matrix Report prepared by FRANdata for the IFA, even though lending to franchise businesses has improved, we will not meet the demand in 2012 which will result in a projected shortfall of 18.6 percent and nearly 94,000 jobs not created. The franchise industry in 2012 will create or maintain more than 425,000 jobs with 56.7 billion in economic output, yet the IFA is working to improve the outlook for business loans as the demand for growth increases and boost bank willingness to lend in an economy that is still slowly improving. “In the competition for limited credit, franchise businesses must prove credit worthy by showing a strong system of performance,” says IFA President & CEO Steve Caldeira.
As part of the Credit campaign, key policymakers and financial regulators gathered with lenders and borrowers at IFA’s 2nd Small Business Lending Summit, in collaboration with the National Association of Government Guaranteed Lenders (NAGGL) and the Consumer Bankers Association (CBA), to help the small business community recover from the lending crisis and improve the outlook for loans.
There is a high demand for growth in the franchise industry and the IFA continues to work to improve the lending environment and eliminate the uncertainties that are adding to the shortfall through outreach, advocacy and new tools and solutions. For more information on IFA’s credit access campaign and partnerships visit www.smallbusinesslending.com