During National Small Business Week, many entrepreneurs and media across the country were discussing the state of small business ownership and growth. According to The White House, the country’s 28 million small businesses are responsible for nearly two-thirds of all jobs. At the end of 2013, franchises accounted for more than 757,000 of the nation’s small businesses and are expected to grow by 1.7 percent in 2014. The IFA reported this in Franchise Business Outlook. Employment in franchise establishments is expected to increase by 2.3 percent.
To keep pace with the projected growth of the industry, many small business owners will turn to lenders this year to secure financing. Without it, growth may be stalled. The good news is lending — both dollar amounts and the number of options — is on the rise. In fiscal 2013, the Small Business Administration (SBA) reported more than $29 billion in lending — one of the highest years on record for SBA. Last month, SBA improved access to two of its major loan programs, 7(a) and 504, allowing small businesses to have easier access to capital.
In recent years, a growing number of Americans have been using funds they’ve put aside in retirement plans like a 401(k) or an IRA to open a small business. Commonly referred to as “rollover funding,” this allows small business owners to use their 401(k) or IRA tax-deferred and penalty-free, with the added bonus that there is no debt burden. (For more on how this works, visit our blog.)
Additionally, we’re seeing a growing number of small business owners using a securities-backed line of credit. Aside from its convenience and easy access, it provides unparalleled flexibility. Entrepreneurs can use it to fund a business, pay taxes, tuition, purchase real estate or provide a safety net for unexpected expenses.
Some entrepreneurs are even turning to alternative lenders like Dealstruck and crowdfunding sites like Kickstarter and Indiegogo. However, these lenders typically focus on creditworthy small businesses that don’t qualify for bank loans, according to The New York Times.
Whether a franchisee is just looking to upgrade kitchen equipment or hoping to expand operations to another city, options for small business lending are increasing. Partnering with a lending expert can help franchisees develop a personalized plan that includes the best options for funding.