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11 Ways For Bankers And Franchisors To Mend Lending

The recent Small Business Lending Summit drew more than 200 franchisors, franchisees, bankers and policymakers to Washington, D.C. to discuss how banks and small businesses could work together to help boost lending that could help rebuild our fragile economy. reports that solving the small-business lending problem is vital because of the role that small businesses have failed to play in the country’s economic recovery. While small businesses have previously led us out of recessions, that’s not the case this time due to financing issues, explained Chad Moutray, the former chief economist for the Office of Advocacy at the Small Business Administration.

According to, the summit revealed two camps at a crossroads with lenders eager to give more funding to businesses yet facing greater regulatory and risk obstacles, while business owners criticized the government red tape and enormous paperwork that still resulted in rejections from banks.

“Without sufficient funding, franchise businesses will continue to struggle,” said Steve Caldeira, the IFA’s president and chief executive.

While banks admit that they have tightened up their lending standards, they say that they’re making more loans this year than in 2010. Some institutions are actively helping franchisors, such as Huntington National Bank who is loosening its credit for small businesses and no longer demands a full year’s worth of information from borrowers, but now looks for a few quarters of solid growth and projections. Overall, bankers want to improve their relationships with small business owners and believe that they can work together toward economic recovery.

Mark Luppi, executive vice president and head of business banking at HSBC Bank U.S.A., N.A., and chair of the CBA Small Business Banking Committee, offered 11 ways to for banks and franchisors to improve their relationship:

Banks must:

• Create franchise programs and build relationships with franchisors
• Develop a screening process that brings in high-quality applicants that can generate revenue
• Leverage programs such as those offered through the Small Business Administration that drive the desired risk profile

• Move faster on loan requests
• Look at every option to get to yes
• Build an incentive program that motivates their sales force to seek out opportunities

Franchisors must:

• Develop relationships with banks in their markets
• Create an introduction for their franchisees

• Demonstrate what they do to support franchisees

• Invite banks to discovery days and explain their franchisee selection process

• Express their brand support and provide solutions for when liquidation is necessary

“We’re all partners and always have been,” said Greg Clarkson, executive vice president and division manager, SBA Lending Division, BBVA Compass and chairman of the National Association of Government Guaranteed Lenders, or NAGGL. “There are 3,500 franchised concepts and 7,500 banks. That’s an enormous powerhouse of job creation. We need to focus on that. We can’t let time cure this issue.”

Read the article.

MDG Advertising is a full-service South Florida advertising agency, with offices in Florida and New York, that specializes in developing targeted franchise marketing solutions, exceptional online executions, and solid branding and media buying strategies that give franchises a real competitive advantage. MDG Advertising handles creative, media, and interactive marketing for Coverall, one of the world’s leading commercial-cleaning franchising companies, with a global network of more than 90 support centers and 9,000 franchisees.

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