The International Franchise Association introduced new tools to help bridge the gap between banks and franchisees looking for financing, including a Franchise Lending Index and Franchise Lending Template, at its second annual Small Business Lending Summit last week in Washington, D.C.
The index will measure franchise credit access on a monthly basis and was created in partnership with BoeFly.com, an online lending marketplace. The new lending template, set to debut in the second quarter, was developed with the Consumers Bankers Association to ease communication and establish an easier way to handle due diligence between potential borrowers and lenders.
The moves were announced at last week’s summit, which was hosted by the IFA, The Financial Services Roundtable, Consumers Bankers Association and the National Association of Government Guaranteed Lenders. The groups came together to discuss the lending environment for small businesses, especially franchisees, during a time when growth has been stifled by lack of access to credit. In 2012, franchise businesses demand $11.72 billion in capital, but will receive $9.5 billion, creating an 18.6-percent shortfall, according to the IFA. The gap, although smaller than in 2011 when it hit 19.6 percent or in 2010 when it totaled 22.8 percent, is created by tighter credit standards, increased regulations and tax uncertainty, the association said.
“While we have seen an improvement in lending since we began this campaign, more education and outreach from the franchise industry will be critical to closing the gap between franchisors’ demand for growth and banks’ ability to meet that demand,” said Steve Caldeira, president and chief executive of the IFA.
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