To get a better read on the current outlook for financing the purchase of a franchise, it’s helpful to review the findings and takeaways now that all of the major lending institutions have completed their first-quarter earnings reports. Compared to where the country was a year ago, the lending outlook has brightened significantly. However, there are still some key concerns to consider, not the least of which is our stubbornly high inflation level.
FranNet of DFW and Oklahoma has compiled a collection of updates from different banking sectors and what their recent earnings reports can tell us about the lending environment as the U.S. heads into the summer season.
Growth of Commercial Loans
Commercial lending is growing once again, after being stalled out for much of the pandemic. U.S. economic indicators are directly influencing this market, as reflected in the current supply chain and labor shortage issues. Lending related to company investment in technology and efficiencies are on the rise, and capital expenditures are expected to remain strong. Two thirds of commercial lenders predict a robust consumer lending environment for the remainder of 2022.
Bank Loans for Businesses
The security of franchising’s business model has increased lender trust, as noted in the increasing demand for commercial and industrial lending. Data compiled by franchise market researcher FRANdata (a partner brand of FranNet) is indicative of a rebound in this sector, with several bank loan officers noting upswings ranging from 7% to 21%. As consumer spending grows, along with companies restocking inventories. New small business lending is up 10% from Q3 2020 and new lines of credit have grown more than 40%.
Key Concerns
If you watch the news on a regular basis, you’ll know that inflationary concerns, rising interest rates, labor and supply issues are all at the forefront of economic concerns. The banks are watching even closer. The Fed continues to take appropriate action to mitigate these risks to the country’s economic interests. If the country continues to prevent the return of a widespread Covid threat, business and commerce should continue to strengthen, open up, and offer a favorable lending environment.
While you can get an accurate snapshot of your funding options from most franchisors, FRANdata has built a proprietary credit score model for the brands themselves – provided they meet certain characteristics. Franchisors must have 10 or more years of history, and enough size and longevity to obtain a rating. FRANdata’s Credit Scoring (FUND) Model is a barometer of the credit risk and performance categories tied to franchise systems and individual unit performance. Individual reports for brands that meet eligibility are available in FRANdata’s Franchise Registry.
If you’re encouraged by these statistics and the current small business lending environment, perhaps it’s time to consider your entrepreneurial future. If you’d like to establish small business ownership through franchising, you can make your own no-cost, no-obligation appointment with FranNet of DFW & Oklahoma. We’ve have helped hundreds of entrepreneurs become their own boss and secure a future that belongs solely to them. And we can also help you find the funding resources you need to secure financing for your own small business. We’d love to introduce you to a whole new world of possibilities through franchise ownership. Getting started with your personal entrepreneurial assessment is easy – just ask us how!