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A new report released at the start of the International Franchise Expo in New York City shows that U.S. Small Business Administration (SBA) lending to franchising increased more than 60 percent over the previous year.
The report, co-authored by the Coleman Report, the National Association of Development Companies (NADCO) and the International Franchise Association (IFA), showed that nearly 3,300 SBA loans went to franchises in 2012 for a total of over $3.8 billion, an increase of 34 percent in number of loans delivered and a 60 percent jump in dollar volume.
SBA financing for commercial real estate, equipment and leasehold improvements known as "504 loans" increased even more — 67 percent in 2012 to $2.5 billion in total project finance. 504 loan volume nearly doubled between 2010 and 2012, while 7(a) volume ticked up nearly 12 percent.
"The dramatic increase within the SBA 504 commercial real estate and equipment loan and 7(a) programs demonstrates the continued ability of the franchising industry to create jobs and generate economic growth," said Steve Caldeira, IFA president and CEO. "While there are clearly still some gaps in accessing capital, especially for the first-time entrepreneur, IFA's ongoing efforts to better educate the lending community about franchising, has led to significant progress for our industry since the recession."
QSRs lead the way
The brands receiving the most SBA loans from 2010 to 2012 were Subway (573), Dairy Queen (182), Jimmy John's (176), Dunkin' Donuts (166), Anytime Fitness (154), Choice Hotels (136), Sport Clips (130), Ace Hardware (125), Days Inn (119), Little Caesar's Pizza (112), Culver's (108) and Holiday Inn Express (107).
"SBA loans have become increasingly popular as a franchise finance solution," said Coleman Report CEO Bob Coleman. "The smartest franchise concepts are the most aggressive in employing this powerful franchise expansion tool."
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