Small Business Administration Franchise Loans: Risk of Loss Can Be Reduced and Program Effectiveness Improved

摘要

The Small Business Administration accepts greater risks than necessary by not requiring franchisors (companies selling franchises) to guarantee repayment of loans or share SBA guarantees of bank loans as a condition of agency lending, accepting weak types of collateral, and guaranteeing most bank loans at the maximum percentage instead of negotiating for a lower percentage. Also, SBA needs to improve loan approval practices to make sure that legal requirements and Federal regulations are enforced and to better assist franchise borrowers.