Tag Archives: credit access

SBA Announces Near-Record Loan Volume in 2012

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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.

Members of the International Franchise Association joined Senate Majority

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Members of the International Franchise Association joined Senate Majority Leader Mitch McConnell (R-Ky.), Sen. John Barrasso (R-Wyo.) and Sen. Marco Rubio (R-Fla.) for a press conference yesterday to discuss burdens that policies being pushed by some Democrats and the administration are placing on franchise businesses’ ability to sell more franchises, hire workers and grow the economy. 

“Franchise small businesses need government to get out of the way in order to continue creating jobs at the rate they have historically,” said IFA President & CEO Steve Caldeira. “We applaud Senate Minority Leader McConnell for echoing that message and urge the administration and all members of Congress to develop bipartisan, pro-growth solutions that help franchise businesses to create jobs.”

“The government itself is the problem now,” said McConnell. “We have to allow  the private sector to do what it does best which is to to grow, expand, and create jobs.”

“In recent years, one of the reasons I have not sought to grow is uncertainty surrounding the health care laws,” said David Barr, Chairman of PMTD Restaurants LLC and its affiliates (a franchisee of KFC and Taco Bell) and Rita Restaurant Corp. (the owner and operator of Don Pablo’s Mexican Restaurants). “Obamacare will force me to either decrease employees or move workers from full-time to part-time employees to avoid paying penalties.”

Unless Congress repeals or significantly changes the health care law, 3.2 million full-time employees and tens of thousands of franchise businesses will be at risk of losing their jobs, according to a recent report prepared by Hudson Institute for the International Franchise Association.

“All of my business income is needed to continue to grow and create jobs,” said Gail Johnson, CEO of Rainbow Station, which is a franchise that offers nationally accredited early childhood education and school age recreation programs. “Taking away income from small business owners like myself  through a tax increase is quite simply  a job smasher.”

IFA has urged Congress to consider permanent, comprehensive tax reforms that encourage job creation by franchise businesses, but that also do not hurt small businesses and franchises that file as individuals. Click here to view IFA’s recent letter to Senators.  

“Small businesses that want to grow and have a track record of success should be able to get loans from lenders, said Bob Dorfman, a Five Guys multi-unit franchisee with 9 stores in Tampa, Fla., 10 stores in Columbus, Ohio, 14 stores open in Houston and South Texas, and a commitment with Five Guys to open and operate 103 total stores. “Lenders should be free from overregulation and scrutiny that’s unnecessarily holding back job creation.

Over 82,000 new jobs and over $10 billion in economic output will be lost in 2011 as a result of lack of credit flow to franchised small businesses, according to the IFA Small Business Lending Matrix & Analysis, Vol. 3.

“We have heard today that the rules and the regulations coming out of Washington are making it harder and more expensive for the private sector to create jobs,” said Barrasso.

“Let’s listen to the job creators and create an environment where they can go out and Americans can do what they have done better than anyone in the history of the world,” said Rubio. “They haven’t forgotten how to go out and start a business. These people haven’t run out of good ideas. They just need a government that makes it easier for them to go out and do that and not harder.”

Posted by Matt Haller, IFA Sr. Director of Communications


Denver franchise execs host first-ever “lending bootcamp”

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Leaders of the nation’s small business credit access campaign arrived in Denver July 19 for Faegre & Benson’s first-ever “lending bootcamp” spearheaded by Faegre partner and IFA Supplier Forum board member Kevin Hein as part of the FBN’s annual dinner at the Denver Country Club.

IFA Credit Access Task Force Chairman and Dairy Queen franchisee Bill Hall, board members Shelly Sun, co-founder of BrightStar Care, Inc., and Darrell Johnson, President & CEO of FRANdata, headlined the event, drawing support from finance leaders such as U.S. Bank SBA Division President Julie T. Huston of San Diego, Mike Owen, COO of CDC Small Business, which has provided more than $8 billion in SBA lending. Huston and Owen represented the National Association of Government Guaranteed Lenders (NAGGL) and the National Association of Development Companies (NADCO), the trade association for the nation’s Certified Development Companies (CDCs), lenders certified by the U.S. Small Business Administration (SBA) to provide financing to small businesses through 7(a) and 504 programs.

The seminar of strategies and solutions to the financing dilemma included David Nayor, Executive Vice President of BoeFly LLC, the online lending source for franchising, and David Nilssen, founder of Guidant Financial, which offers tax-advantaged financing strategies for business leaders.

“This was an unprecedented event in Denver,” said Faegre’s Hein. “We are grateful for the impressive response to our ‘lending bootcamp’ and are proud to bring together the nation’s lending and franchise leaders to improve credit access for franchisors and franchisees.”

IFA President & CEO Steve Caldeira has led the effort to address franchising’s number-one issue, which will be the focus of this year’s IFA Public Affairs Conference Sept. 13-14 in Washington.

“It’s great to see leaders like Kevin Hein and Faegre taking the IFA’s Credit Access Campaign across the country,” said IFA Credit Access and Dairy Queen franchisee Hall. “Franchisees, franchisors and lenders are looking for this kind of leadership. The education and the networking are critical to help create the jobs our country needs.”

“As a franchisor, I know that all of us need to be engaged in innovative approaches to help our industry grow,” said Sun. “I am proud to be part of the effort.” Sun was quoted in The Washington Post days after the event on her views on the U.S. economic outlook.

Faegre & Benson’s annual Franchise Summit, led by partner and IFA Credit Access Working Group member Brian Schnell, takes place Aug. 11-12 in Minneapolis with a focus on accessing credit and financing solutions.

More information here.

As business groups such as the IFA, the U.S. Chamber of Commerce and The Business Roundtable

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As business groups such as the IFA, the U.S. Chamber of Commerce and The Business Roundtable announced their support for efforts to raise the debt ceiling in order to ensure the economic certainty of the nation for America’s job creators and franchise small businesses, Jim Amos, the CEO of Tasti D-Lite spoke to MSNBC’s Chris Jansing this morning, moments before President Obama addressed the nation and called on lawmakers to find a bipartisan solution.

Asked by Jansing for his perspective about the impact a government default would have, not only on a big business, but also from the perspective of those small business owners who own Tasti D-Lite franchises, Amos called on the government to do everything it can, while also calling for a renewed focus on limited government, for the private sector to thrive. 

“If you are ideologically driven on the view that the public sector and government can solve these issues, then you’re going to make a certain set of decisions. If your view is that the private sector can participate, you will make a different set of decisions,” said Amos. “I think our country in the beginning was founded on principles that supported economic and political freedom or liberty. If you look at modern history, the greatest growth rates that we’ve had economically, they were driven by limited government.” 

The impact a government default would have on the ability of small business owners looking to expand, or prospective franchisees to obtain capital to purchase a franchise business, was also noted today by IFA President & CEO Steve Caldeira.

“Congress must raise the debt limit now to ensure the stability of our economy and prevent the credit markets from further volatility amidst an already difficult lending, public policy and regulatory environment for franchise small businesses,” said Caldeira. “If Congress allows a default on the obligations of the United States, it will have a dramatically negative impact on our economy and on the confidence of America’s small business owners and job creators.”

Posted by Matt Haller, IFA Director of Communications

 

“Unchanged” Diagnosis for Ailing Economy

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The first six words of the Labor Department’s June report on jobs says it all – “Nonfarm payroll employment was essentially unchanged. . .”  More than 14 million Americans are unemployed.  Of these, 6.3 million are classified as long-term unemployed.  More than a half million Americans have lost their jobs since March.  Add to the 14 million an additional 8.6 million Americans who are classified as “part-time for economic reasons”.  These are American workers whose hours have been cut  or who are working part-time because they have been unable to find full-time work.  And in each section of the report, the code words are “unchanged”, “no improvement”, “essentially flat”. 

Many years ago, Senator Jennings Randolph told the story of his first meeting as a young congressman with President Franklin Roosevelt.  During the depths of the Great Depression, President Roosevelt called a meeting in the White House of Congressional leaders, business leaders, scientists and educators.  His first words were, “Gentlemen, we must act, the time for debate is over.  We must act now.”

IFA leaders have urged congressional leaders and administration officials to take such action on three fronts.  First, examine recently imposed financial regulations that are restricting the flow of capital to small businesses.    House Small Business Committee Chairman Sam Graves (R-MO) agreed with IFA, saying that forcing banks to keep more capital in reserve has stifled borrowing.   ‘We’ve got to untie the hands of these lending institutions,’ Graves said. ‘It’s ridiculous what you have to jump through.’”

Second, IFA has urged Congress to increase support for the SBA 7(a) loan program.  At the current pace, the 7(a) program will hit its $17.5 billion authorization cap before Sept. 30.  IFA leaders have urged Congress to increase the 7(a) lending authorization limit to $19 billion before it leaves town for its August recess.

Third, IFA leaders have called on Congress and the Treasury department to redirect a portion of the $30 billion Small Business Lending Fund to support an expanded loan program for small businesses.   Only a fraction of the fund has been distributed and many community banks have expressed no interest in receiving funds due to the governmental red tape.

Franchisors and franchisees understand that “unchanged” is not a winning strategy.  Businesses must grow and expand, adding new products and services, to win more customers.  A greater sense of urgency and a call to action by both government and business leaders is needed to “change” our ailing economy for the better.     

Posted by John Reynolds, President, IFA Educational Foundation