SBA franchise loans 'trending in the right direction'

12/15/2011

According to recent data from the Small Business Administration, the agency issued a record $19,6 billion 7(a) loans during the latest fiscal year, Entrepreneur Magazine reports.

Of that amount, more than $1.5 billion were for franchise businesses, a marked increase from the $826 million they received during the previous fiscal year.

Steve Smits, associate administrator for the Office of Capital Access at the SBA, told the news source that franchise loans are "trending in the right direction," although it's still important for businesses to "put the same level of attention into securing the necessary financing for their business as they put into creating their business plan."

He recommends that for startup businesses hoping to build a franchise, between 20 and 30 percent of funding should be introduced to lenders to have the best chance of receiving a loan.

Also, Smits suggests connecting with a local Small Business Development Center or SBA district office if possible, since employees look at business plans almost everyday and can determine if a franchisee is on the right track.

The news source notes in a separate article that one struggling franchise, Pizza Hut, was able to return to the Franchise 500 top 10 this year by cutting prices, simplifying its online site and placing a renewed emphasis on delivery.