The biggest challenge facing the franchise industry’s ability to create jobs and reach its full potential is access to capital. Franchisors want to expand their systems. Franchisees need to make enhancements to their existing stores to keep up with the competition. Many also want to secure credit in order to grow. Without credit, our industry is handcuffed and held hostage — much like the rest of the economy.
Our message about this critical challenge and its direct impact on job creation has begun to resonate among political and media thought leaders in Washington, D.C.
Treasury Secretary Timonthy Geithner, June 22, 2011. Mark Wilson, Getty Images
House Small Business Committee Chairman Graves brought this issue to light in his committee, convening a hearing entitled, “The State of Small Business Access to Capital and Credit: The View from Secretary Timothy Geithner.”
IFA is now calling on Congress to ask Secretary Geithner and others to reverse financial regulations that are strangling small business credit and to redirect the failed $30 billion Small Business Lending Fund – such as SBA’s proven and very successful loan guarantee programs.
As The Wall Street Journal reported yesterday, many banks have participated in SBA loan programs that provided a 90% guarantee from the government, and would support a similar arrangement today.
“That approach is echoed by William Hall, who owns Dairy Queen franchises in Texas and chairs the credit access committee of the International Franchise Association,” the Wall Street Journal wrote. “’The government actually can help, but it isn’t going to be the same way they did in the TARP program. It has to be some sort of guarantee program,’” Bill told the Journal.
“The IFA estimates that franchise businesses, which amount to some 825,000 small businesses in America, will be able to access $8.4 billion in lending this year, but expects a shortfall of $2 billion in available loans, even with the government program,” the Journal continued.
IFA will continue to press the case for increasing credit access with lawmakers, the Administration and in the media – and stay tuned for more tools and resources for IFA members and franchise lending partners as we work to develop private sector solutions to spur lending and create jobs within the franchise industry.
Posted by Matt Haller, IFA Director of Communications