Lenders bet on franchising in Las Vegas

Speaking to a packed room of nearly 300 franchise leaders at the annual Franchise Times Franchise Finance Conference in Las Vegas, U.S. Bank SBA Division President Julie Huston said Tuesday the IFA’s Credit Access Campaign has been a “gamechanger,” positioning the industry for significant growth as banks begin to expand lending after three years of stagnation. “I would give the industry an A for the way you have addressed this problem.” Huston, whose franchise lending career has included working for GE Capital and CIT, said use of tools like FRANdata’s Bank Credit Report and BoeFly are enabling franchise lending to expand faster than other small business lending categories.

“There’s now growing pressure inside our organization to book loans,” Huston said, echoing reports from other lenders at the conference. The reason: sources of revenue for banks such as credit card swipe fees have shrunk. But Franchise America Finance CEO Ron Feldman said the story is nuanced. “Conventional lending is back,” he said, “but it’s only back for great operators.” 

Jeff Roseland of Wells Fargo, which recently joined the IFA for the first time, said the bank is developing a major franchise lending strategy. “There are a lot of lenders coming back to franchising,” said Franchise Times publisher Mary Jo Larson. “CIT is here, and others we haven’t seen in a while.” Other sponsors included Trinity Capital, Mt. Pleasant Capital Corp., Swift Capital, Capital Spring, and Merchant Cash & Capital.

Feldman said franchisors still need to be proactive in helping franchisees get financing. “Waive the franchise fee,” he suggested. “Anyone thought of that?”

“Also, you need a toolkit for your franchisee to take to the bank. Otherwise they’ll walk in with the  FDD. It’s 400 pages written by lawyers,” Feldman warned. “The bank will say no thank you.”

Posted by Beth Solomon, Vice President, Strategic Initiatives & Industry Relations