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National Restaurant Association - Summit addresses small business challenges in accessing credit

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Summit addresses small business challenges in accessing credit

Lenders are adding staff and working to get word out that they have money to lend small businesses. But restaurant operators and other entrepreneurs still can't get the credit they need.

The International Franchise Association, in cooperation with the National Restaurant Association and other anchor partners, brought together lenders, business owners and government officials Thursday to address that gap.

Participants in the April 7 Small Business Lending Summit entrepreneurs discussed opportunities to improve entrepreneurs' access to credit so they can grow their businesses and create jobs.

"Small business is the key to the recovery," said Aziz Hashim, president and CEO of Atlanta-Based National Restaurant Development Holdings. NRD owns 75 Popeye's, Checker's/Rally's, Subway and Moe's Southwest Grill restaurants.

Access to credit is one of the restaurant industry's priorities, said David Gilbert, chief operating officer, National Restaurant Association. Seventy percent of restaurateurs are single-unit operators, and more than 90 percent of industry establishments have fewer than 50 employees, he noted.

“The tight credit market over the past few years has been frustrating — and at times, devastating — to thousands of our small-business members,” Gilbert said. “Greater access to credit leads directly to more jobs. We look forward to working with lenders and government regulators to find solutions that will help drive small business franchise growth.”

Todd Jones, managing director, franchise finance, GE Capital Americas, said he's seen a significant uptick in plans for acquisitions, remodeling and new stores among restaurant operators. In the past two years, operators were more concerned with paying down debt and "shoring up operations," he said.

"I'm so encouraged about the conversations we're hearing about building again," he said.

To help entrepreneurs accomplish those goals, his company plans to lend $900 million to $1 billion to franchisees this year, he said. "We have capital to deploy."

Restaurant operators reported difficulties obtaining credit and financing in 2010, according to the National Restaurant Association’s 2011 Restaurant Industry Forecast. Forty-four percent of quickservice operators said it was more challenging in 2010 to obtain credit than it was in 2009; seven percent said it was less challenging. Among fullservice operators, 29 percent said obtaining credit was more challenging in 2010, while one of 10 said it was easier in 2010.

“It is crucial that we find ways to help restaurateurs get the financing they need for improvements and expansions,” Gilbert said.

Bob Dorfman, Five Guys Burger and Fries' second largest franchisee, discussed how he increased his business to 30 stores over 16 years. "I started off like most everyone else -- with my own money and SBA loans," he said.

The day-long summit included sessions about the role of franchising in growing the economy and creating jobs, lenders’ perspectives on the credit crunch, legislative and regulatory challenges facing franchisors and franchisees, and ideas to increase capital for small businesses.

Speakers included Small Business Administrator Karen Mills and Sen. Mary Landrieu (D-La.). Mills acknowledged that some franchisees can't get the credit, but noted that SBA was streamlining processes and reducing paperwork requirements to get more credit into the hands of entrepreneurs.

She thanked Landrieu and Congress for passing the Small Business Jobs Act last year, calling it "the single most important small business legislation to pass in 10 years." As a result of the legislation, Mills said SBA was able get $450 million to franchisees in the first quarter of this year.

Landrieu, chairman of the Senate Small Business Committee, said one of the committee's goals was to strengthen SBA so it could become "the voice of small business on Capitol Hill."

"If you put all the small buisnesses in this country ... they form a major force," she said.

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