New IFA/BoeFly Franchise Lending Index Shows Steady Increase in Lending Over Past 12 Months
PR Log - Apr 17, 2012 - Washington, D.C. – Franchise lending has steadily increased over the last 12 months, according to the new monthly 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. The Index was announced today at the Small Business Lending Summit, a meeting of franchising, finance and policy leaders.
The IFA/BoeFly Franchise Lending Index (http://www.boefly.com/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. The Index, a time series index set to a value of 100 in January 2002, creates an insightful, standard measure of franchise credit access. At present, the index remains below the 100 mark, having only having crossed above this mark twice since July of 2008. The Index is correlated with GDP and Employment, lagging both indicators. The Index is an initiative of the strategic alliance between the IFA and BoeFly announced in 2012.
Over the past two years, lending showed the steepest increase from November to December 2010, when lending to franchise businesses rose by 20.54 percent. This increase was largely attributed to SBA stimulus from the American Recovery and Reinvestment Act of 2009 (ARRA), which allotted $730 million in SBA loans. The upward trend was followed by a sharp 28.78 percent decrease from December 2010 to January 2011 as franchise lending reverted back to its financial crisis levels following the impact of government stimulus.
According to the Index, franchise lending experienced a growth of 10.56% between February 2011 and February 2012. Despite the net 12-month gain, the period was variable with as many months seeing expansion as retraction. The year-to-year differences for each month in the entire Index are shown in the graph below.
“The Index confirms that access to credit in the franchise industry has achieved relative stability, a non-trivial achievement in the wake of the financial crisis,” said Mike Rozman, co-president of BoeFly. “In developing the current Index, we explored how borrowers were using credit to establish new franchise units or to refinance existing debt. In the first two months of 2012, there was a meaningful shift in the direction away from new development: in February, 42.7% of loans approved by dollar amount for franchises was used to fund new businesses, whereas January experienced 54.9% of credit went to new entities. Franchise owners continue to take advantage of record low interest rates to shore up their balance sheets. And, although those seeking more short-term job growth are likely disappointed that a greater percentage of financings aren’t going to fund new formations, we are encouraged that franchise owners are better positioned for current profitability and therefore future, more secure growth.”
“While we’re very glad to see that franchise businesses are getting more access to capital, the industry is still facing a shortfall in lending that has limited franchise growth and job creation since the start of the recession,” said IFA President and CEO Steve Caldeira. “What gets measured gets fixed, and tools like the IFA/BoeFly Franchise Lending Index will help us continue to increase lending to franchising and create the jobs America needs.”
About the IFA/BoeFly Franchise Lending Index
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. The Index, a time series index set to a value of 100 in January 2002, creates an insightful, standard measure of franchise credit access. The Index is an initiative of the strategic alliance between the IFA and BoeFly announced in 2012.
BoeFly.com makes it easier to obtain small business loans by reducing the time, cost, complexity, inefficiency and frustration associated with small business lending. Its online proprietary matching technology connects small business borrowers with multiple lenders from among its over 2,200 participating banks, based on the lending profiles provided by the banks and the information provided in the borrower’s loan request.
Borrowers build a complete decision-ready loan request online using BoeFly’s exclusive “SmartForm” technology which, when completed, provides the information that over 2,200 lenders nationwide indicated to BoeFly they want to see before moving forward with a loan request. The SmartForm is easy to use and guides borrowers through the process. Once BoeFly’s matching technology identifies compatible lenders, borrowers then have complete control over which lenders can instantly access their loan request. Using BoeFly, borrowers can connect with multiple lenders quickly and easily, providing a greater probability of obtaining a loan, as well as more favorable loan terms resulting from the creation of a competitive marketplace. Lenders benefit by being presented with only those loan requests that fit their lending profile, dramatically lowering their cost and time of origination. BoeFly is not a broker. Borrowers pay a small one-time fee and lenders pay an ongoing subscription fee; BoeFly never charges transaction or referral fees.
BoeFly, now in a Strategic Alliance with the International Franchise Association to expand credit access to franchisees, offers a Franchise Solution that brings these benefits to the large and growing small business franchisee community and is the choice of over 100 brands, including Dunkin’ Donuts, Carl’s Jr., Express Personnel and Kiddie Academy, among many others.
BoeFly’s Affiliate Solution is the financing exchange chosen by the Association of Small Business Development Centers, representing approximately 1,000 centers nationwide, which are funded in part by the U.S. Small Business Administration, to serve small businesses, and Franchise Gator, the leading site for information on franchise opportunities.
BoeFly was founded by small business owners and small business lending experts with extensive small business lending experience. The company is privately-held and is based in New York City. http://www.boefly.com.
About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.