Lending Still a Barrier for New Local Franchisees

April 5, 2011  |  

(Washington Post) — A dearth of available capital, despite the improving economy, is hampering franchise growth amid increased business demand, according to the International Franchise Association.  The industry trade group is part of a coalition, including the Consumer Bankers Association and commercial lender CIT Group, hosting the Small Business Lending Summit on April 7 at the Capital Hilton Hotel in the District. The event aims to bridge the disconnect through sessions highlighting the low-risk profile of franchising, best practices in loan underwriting and legislative policies that can aid small businesses.  Borrowers are having a hard time securing home equity loans, a traditional source of funding for franchisees,  or putting up commercial assets as collateral in the face of depressed real estate values. Meanwhile, lenders say there is a paucity of credit-worthy applicants.  “Make no mistake about it, we have tightened up our standards on the bank side because of the economic downturn,” said Richard Hunt, president of the Consumer Bankers Association, who said his members are eager to find ways at the summit to support franchisees. “We want to make loans . . . people are just not as credit worthy as they were three years ago.”

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