IFA's Nearly Year-Long Effort to Ease Credit
WASHINGTON – Last week Matt Shay, the CEO of the International Franchise Association, and several franchise owner-operators attended a meeting with President Barack Obama, the culmination of months of efforts.
“We thank President Obama for his actions and we thank the thousands of IFA members who made their voices heard this year through letters, meetings and calls with policy makers,” Shay said. “Making SBA loan programs work better for entrepreneurs seeking capital to open, acquire or expand a business will allow the economy to recover faster and provide the necessary bridge to a functioning commercial lending market once the recovery is complete.”
In fact, the IFA as early as December of last year contacted the previous administration’s Treasury Secretary, Hank Paulson, requesting that he use Troubled Assets Relief Program (TARP) funds to improve lending to franchise owners. Unfortunately, outgoing Secretary Paulson had bigger things on his mind. Now it is the new Administration that is taking action, announcing plans to shift some of Wall Street’s bailout funds to jump-start SBA-backed lending to small businesses.
Alisa Harrison, vice president of communications and marketing for the International Franchise Association, observes, “IFA has been working on credit and economic recovery issues since last Fall.” On the same day that President Obama featured franchisees and raised the caps on SBA-backed loans to stimulate small business lending among banks, Ms. Harrison wrote Blue MauMau that the event was the culmination of “letters, meetings, testimony, advertisements and media interviews. Beating that drum is the value of a trade association that represents ALL facets of the industry.”
The IFA consists of over a thousand paying franchisor members who ask the association to lobby on their behalf. The franchisees of its paying members are allowed to participate in IFA activities free of charge.
In January of this year, the IFA introduced a recovery plan that asked the SBA to increase the SBA 7(a) loan program to $5 million, an initiative that the President announced last week. It also urged the SBA to sharply reduce SBA lender fees to incentivize banks to make loans, and it wants the SBA to relax bank audit standards so that lenders will not fear losing their SBA loan guarantees once the loan is issued.
The White House seems to be listening.
Addressing small business issues last week, the President brought up the story of a Dunkin’ Donut franchisee struggling to access capital to expand his business. He announced that he would like to shift some of the TARP funds over to community banks in order to spur lending to small businesses, which has slowed to a trickle. In order for that to happen, the President is requesting that Congress increase Small Business Administration 7(a) and 504 loans from the current cap of $2 million to $5 million. The loans are used by small business owners to typically buy equipment, land and buildings.
The announcements by the President read as if they were coming from the IFA’s playbook. It reflects considerable effort by the lobbying group.
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Dec 23, 2008: The IFA urges Treasury Secretary Hank Paulson to use the Troubled Assets Relief Program to improve small business loans
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Jan 14, 2009: IFA urges Congress to take steps to increase small business access to credit
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Jan 22, 2009: IFA attends the U.S. Conference of Mayors and pitches the importance of franchising to the economic development of their municipalities
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Jan 28, 2009: IFA sends a letter to the SBA on the need to not cap lenders ability to finance “goodwill” at $250,000
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Jun 10, 2009: A leader of the Great American Cookie Independent Franchisee Association and a franchisee, Lawrence “Doc” Cohen testifies before the U.S. House of Representatives Small Business Committee that the SBA needed to improve its small business financing programs
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Jul 16, 2009: Matt Shay appears on Fox Business News (video stream) to explain problems to small businesses and franchise owner-operators with CIT skirting bankruptcy
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Jul 23, 2009: IFA leaders meet with the Treasury, Federal Bank and Small Business Administration
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Sep 10, 2009: IFA advertises on the impact of the credit crunch. The ad was placed just prior to its Public Affairs Conference
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Sep 30, 2009: Dina Dwyer Owens, CEO of franchising firm The Dwyer Group and this year’s chairwoman of the IFA, gives testimony (see video) to the U.S. House of Representatives Small Business Committee asking for the perpetual extension of expiring tax reductions such as the death tax. She also asked for a tax credit for veterans buying franchises
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Oct 14, 2009: IFA’s CEO and president Matt Shay gives testimony to the U.S. House of Representatives Small Business Committee on the need to free up capital for franchising systems
Despite such efforts, Harrison warns that the work is not yet done. “We still have a way to go to get the legislation through Congress,” she says.
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Related Reading:
- White House Fact Sheet (pdf), the Administration's plan to help small businesses access credit and create jobs
- Obama Asks for SBA Loan Expansion, Franchisees Agree
- Lenders and Franchisors Work Together to Keep Franchise Buyers from Knowing Bogus Earnings Projections for SBA
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