Franchise Lending Increasing Again
Franchise lending is on the increase again. After a one-month hiatus, loans to franchise businesses increased 2.92 percent in March from February, according to the monthly Franchise Lending Index from the International Franchise Association and the online lending site BoeFly.
The lending index also found that loans to franchises grew 1.28 percent in March from March 2012.
The index has been slowly increasing since 2010, save for a spike that year when lending surged thanks to various federal incentives in the SBA loan program. But then the index fell in February, both on a month-to-month and on an annual basis, and much of the blame was directed at federal budget cuts, though we'd blame the end of the payroll tax cut, and the rough adjustment the economy has had to make since those funds were taken from consumers' paychecks.
The March increase shows that the February decline was mostly a blip. "The increase in franchisee credit access month to month and year over year is a positive sign that could hopefully be maintained in the coming months," said Mike Rozman, co-president of BoeFly.
Still, Steve Caldeira, IFA's president, said there remains a lending shortfall in the franchise space despite the increase.
The lending index is created from a monthly analysis and integration of data from BoeFly's marketplace and franchise loan data from the Small Business Administration. The BoeFly data is based on the activity of 3,600 lenders who use the site, while the SBA data dates to 2002.