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Franchise Growth Stymied by Tightening of SBA Loans

Heidi Ganahl, founder of Boulder-based Camp Bow Wow, says although her dog care service franchise is adding locations across the country growth has been stunted by tight financing. Appearing on the front cover of The Denver Post business section this morning, Ganahl was interviewed for a report on how franchise prospects are held back because loans require more cash and collateral. 

The article reports that three years into a halting economic recovery, many small businesses and would-be entrepreneurs continue to struggle with tight access to financing.

Nowhere is the problem more acute than in franchising, where growth has been checked by the inability of many potential franchisees to obtain bank loans, say industry experts and franchise businesses.

Referring to the Small Business Administration guaranteed-loan program, Ganahl stated,

We probably get 500 leads a month, but maybe 10 can qualify for an SBA-backed loan. If we had adequate capital, we would be growing at an incredible rate right now.

The International Franchise Association said lending to franchisees this year is about 20 percent short of demand. They say each $1 million in loans made to franchises creates 40 jobs.

Ganahl said that’s one reason their growth has slowed to about 15 new locations this year, down from about 70 in 2007. But she said demand for the company’s up-scale dog-care services has continued to climb through the downturn.

There are 115 Camp Bow Wows, making it the largest company of its kind, and international expansion is being planned.

The article reports on how prospective buyers have to get more creative with finances. One prospective franchisee said he didn’t spend much time trying to get a loan because his income was limited. Instead, he opened 15 credit-card accounts and used them to borrow $150,000-plus.



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About Janet Sparks

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Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at or at 303-799-7398.