Lending to franchise businesses decreased by 3.64 percent from June to July following a 5.73 percent increase in June, according to the Franchise Lending Index from the International Franchise Association (IFA) and BoeFly, the premier online marketplace connecting small business borrowers with lenders and a strategic ally of IFA to expand credit access within the franchise community.
Year-over-year performance continued to grow consecutively this year, with a 1.43-percent increase from July 2011 to July 2012.
The IFA/BoeFly Franchise Lending Index is created from a monthly analysis and integration of both proprietary data from BoeFly’s marketplace and franchise loan data from the Small Business Administration (SBA).
BoeFly’s data is collected in real time, based on the activity of more than 2,200 community, regional, and national lenders who use BoeFly to most efficiently source franchise borrowers.
The SBA data used in the analysis dates back to 2002 and covers more than $20 billion in franchise loans.
“Despite the drop in credit access this month, it is encouraging to see a seventh consecutive month of year-over-year growth,” says Mike Rozman, co-president of BoeFly.
In connection with the Index, BoeFly analyzed lending to franchise restaurants, particularly quick-service restaurants. BoeFly’s analysis showed strong growth of 28 percent in lending to quick-serve franchisees in July 2012 versus July 2011.
“As credit access continues the slow climb out of the lows of the financial crisis, our data show that lenders are first turning to industries they understand well, such as restaurants,” Rozman says.
"The downward pressure on franchise lending confirms that credit access continues to be a challenge for franchisees given the ongoing uncertainty in the economy and weak consumer confidence,” says IFA President and CEO Steve Caldeira. “To improve the business environment for franchising, IFA continues to educate members of Congress and the Administration on the challenges facing franchise small business owners and the importance of policies that facilitate capital access and job creation."