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Who Cares About SBA Bottleneck? Those Trying to Close Loans


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The current wrangling over U.S. Small Business Administration loans may seem abstract. But consider the plight of Amanda Purser, an SBA loan closer for Yadkin Bank in Charlotte, North Carolina.

“I’ve got 20 deals on my desk right now,” including six from franchisee borrowers, she says, and the latter have gone into the black hole known as the SBA approval process for franchises.

A loan request from a prospective Subway franchisee, for example, has now been marooned for 48 days and counting. Subway hasn’t been certified as eligible for SBA loans since 2013, Purser says, and this current request is being held up over a leasing issue.

The only information she can get is a referral to a single SBA attorney who reviews franchise agreements to see if they qualify, “and there’s no way to get in touch with that man,” Purser says. Meanwhile, a note on the site that lists franchises eligible for SBA loans directs visitors to contact the franchisor if they have questions.

“At this point I don’t really want to talk to the franchisor. I need somebody within the SBA that says yay or nay,” Purser says. “Let’s get these borrowers to close or get them off the hook,” and allow them to pursue conventional loans or other financing.

As this blogger reported in the June/July issue of Franchise Times, franchisee loan requests are piling up at the SBA. That’s as the agency grapples with the best way to determine which companies are “small” and hence eligible for a small-business loan backed by a government guarantee if the borrower defaults.

Why is it so hard to determine what is a “small” business? Employee counts are obvious: under a certain number and a business is eligible for an SBA loan. But what if the business owner is a party to a franchise contract that, for example, doesn’t allow any practical way for that owner to sell the business on the open market? Is that person really an independent small-business owner?

The SBA asked for comments about how to improve the certification process, and is wading through those now. But no timetable has been given for any changes—meaning the pile on the desks of people like Purser may only get larger.

 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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