Two new reports on franchise funding give mixed feelings on the present state of the credit markets for prospective franchisees. We know the IFA had projected small gains for the franchising sector for 2010, and this reports more or less confirm that forecast.
Medill Reports has an insightful profile of SBA loans, describing the boost that some of them have gotten from President Obama’s stimulus plan. It examines Tony Rackstraw, president of SkyTech, a Chicago-based small security business. Rackstraw needed $300,000 of capital and found it via the SBA.
Marianne Markowitz, regional administrator of the U.S. Small Business Administration cast a generally positive look at the industry.
“Now that the bigger banks are committing more, we are in good shape going into 2010,” she added.
Meanwhile, speaking strictly about franchising, the Kansas City Star has an interesting take on the industry. Their view of franchising in the Midwest is that franchising remains an outstanding business concept, but hurdles still remain for achieving funding.
The piece profiles Anna Gepson, who just bought an Aussie Pet Mobile franchise.
Aussie Pet Mobile franchise in 2006. Gepson worked with an accountant and an attorney to set up a self-directed 401(k).
The franchise fee, three months of marketing expenses, a van and equipment came to around $100,000 — which was a surprise to Gepson.
“I thought you had to have a million dollars in the bank to start a business,” she said.
The story reminds aspiring franchisees to keep in mind that every entrepreneur must pay a franchisee fee. But if you can get the funding you need, there's a lot of different franchises to choose from.