IFA Supports Legislation To Increase Capital To Franchise Businesses

May 18, 2010 // Franchising.com // WASHINGTON — The International Franchise Association today reaffirmed its support for legislation that addresses the credit crisis facing small franchised businesses, specifically the Small Business Job Creation and Access to Capital Act (H.R. 4302/S. 2869).

"Franchise businesses can play an essential role in helping lead the economic recovery if policymakers give them the tools they need to succeed," said IFA Vice President of Government Relations David French in a letter to the leadership of the House Committee on Financial Services. "We appreciate the work of the Congress and the Obama Administration to make changes to government loan programs that will help more franchise businesses create more jobs on Main Street."

IFA's letter coincides with the committee's hearing today on "Initiatives to Promote Small Business Lending, Jobs and Economic Growth." H.R. 4302 and S. 2869 will increase the maximum loan amounts for the Small Business Administration's 7(a) programs to $5 million and for the 504 program to $5.5 million. It will extend the 90 percent loan guarantee rate through the end of FY2010. Given the extreme difficulty many aspiring entrepreneurs are facing in this economy, this increase will allow more individuals to get off the sidelines and access to the start-up capital they seek.

"We strongly encourage Congress to find solutions that do not worsen our federal budget and rising deficits," French said. "Instead, policies should be enacted that lead to increased lending and less government spending. Based on the experience of franchising, we firmly believe that policies to encourage lending will lead to more sustainable long-term job growth."

French said that according to IFA's recently updated Small Business Lending Matrix and Analysis, for every incremental $1 billion in lending, franchised businesses can create 40,400 jobs and $4.2 billion in economic output. Historical data also demonstrates that during previous economic downturns, franchising has led the economy toward recovery. IFA data shows that between 2001 and 2005, the franchising sector expanded by over 18 percent, adding more than 140,000 new establishments and creating more than 1.2 million new jobs.

About the International Franchise Association

The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating 50 years of excellence, education and advocacy, IFA protects, enhances and promotes franchising through government relations, public relations and educational programs. Through its awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the 21 million jobs and $2.3 trillion of economic activity generated by franchising. IFA members include franchise companies in over 90 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

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