Many franchise opportunity buyers have been interested but cannot seem to get funding for a business during the recession. The Obama Administration did put into play a couple of changes on the rules for SBA (Small Business Administration) loan guarantees. Previously, they only guaranteed 80%, but now that figure is 90%; this was part of the Economic Stimulus Package. These newest changes were seen as very positive by the small business community and Franchising companies alike.

Still, many franchise buyers note that credit has not really loosened enough for them to purchase. Home equity loans are tough right now for large amounts with the real estate in some areas down nearly 40-50% and so many people owing more than their homes are worth. Small Business banks are reluctant to loan of businesses right now until they are sure this economy will recovery and the media is still promoting the doom and gloom, even if the stock market which generally leads the economy by 6-9 months is showing signs of recovery, which could be temporary.

The IFA which stands for International Franchise Association is now predicting that franchise lending will be down at least 40% in 2009, which could cause problems for franchising companies trying to make hay as the economy rebounds. Likewise the days of putting your franchise fee on the credit card may also become a thing of the past.

This leaves franchisors in a pickle, as typically recessions are the best time for franchise system expansion; people are laid off need jobs, so they start their own businesses. Financing is the only hold up and for some that hurdle is just too high considering the other economic, and credit issues. But it’s not all bad, at least half of the qualified franchisees are finding the capital they need and they are definitely going to be in the right place at the right time. Please consider this.