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FranNet: Loan Approval Rise Shows Start of Small Business Recovery


July 17, 2012 - Louisville, KY

Since the near-collapse of the world economy four years ago, tight credit markets have stunted small business growth by shutting entrepreneurs off from startup capital. But credit markets are beginning to loosen.

The Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications by International Franchise Association member Biz2Credit.com, found that loan approval rates from big banks jumped a half a percentage point from May (10.6 percent) to June (11.1 percent). The increase also represents a more than 2 percent jump from June 2011, when the approval rate was a dismal 8.9 percent.

The loan approval rate from small banks rose as well, from 45.5 percent in May to 47.5 percent in June -- a full five points higher than the 42.5 percent rate in May 2011.

The franchise experts at FranNet, an international network of franchise consultants, welcomed the news as further evidence of an improving economy with more opportunities for entrepreneurs.

"This year, we've already seen some of our clients finance their initial franchise investments through unsecured loans -- something we hadn't encountered since 2008 -- and leveraging their retirement funds tax-free to pay for their initial investments," said Jania Bailey, FranNet president and chief operating officer. "We certainly welcome the higher approval rates. The more entrepreneurs have access to startup capital, the more jobs they create and the more local economies thrive."

Franchising is one of the few sectors of the national economy that has added jobs during the recession. The IFA predicts the industry will add 14,000 new units and contribute 168,000 new jobs to the U.S. economy this year, and each new franchise unit adds an estimated 10 new jobs to the economy. "If credit markets continue to relax," Bailey said, "those numbers may end up being too conservative."

About FranNet
FranNet, headquartered in Louisville, Ky., is a private franchised business consulting company that for 25 years has helped professionals open their own franchise businesses. FranNet consultants work individually with clients and use a specific profiling and consultative process to determine a business model unique to each person. Its services are free. For more information, visit www.frannet.com.

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