Lending to America's franchise businesses will reach its highest level since the recession, up 10 percent this year to $24 billion, but it will still fall short of demand, according to the International Franchise Association.
Banks will increase lending to franchise businesses by providing $23.9 billion in lending to support 59,300 unit transactions, but that falls $2.6 billion short of what this growing sector of the economy needs, according to a new economic analysis prepared by FRANdata for the IFA Educational Foundation.
This lending shortfall means franchise businesses will create or maintain 85,900 fewer jobs than they would if the industry's demand for credit were met, according to the analysis.
The report shows that in 2013, new and existing franchise units will create or maintain 797,700 jobs and generate $106 billion of annual economic output to the American economy.
The International Franchise Association, which has made access to capital a priority issue, is pleased, however, than lending to franchise businesses will increase this year.
"Franchise growth is inextricably linked to the availability of small business lending and we are pleased to see a positive trend in the availability of capital to existing and prospective franchisees," said IFA President & CEO Steve Caldeira. "Franchising remains the most viable business model in the world to quickly grow and scale a business."
