Are There Any Specific Franchise Categories That Lenders Are Looking More Closely At?

Lenders are looking more closely at specific franchise categories. They are being even more conservative with food franchises. This is In view of the fact that lenders have had some problems with food franchisees that have failed or defaulted on their loan and on newer franchisor companies. To invest in these types of franchise during these times, the lender will require the buyer to meet tighter underwriting guidelines. This could mean putting 30% to 50% down on the purchase of a food franchise. The lender will require higher collateral. The collateral they want is equity in real estate that is owned, or an owner directed IRA, or a Cd etc. The buyer will also need to have direct industry experience of two years or more. In addition, the buyer will need to have higher net worth and more liquid cash reserve money. Since food franchises make up a high percentage of all franchises, there usually is a higher failure rate during an economic slowdown period, which is why lenders will be more careful on their lending policy.

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Here’s A Little Bit About Me. 20+ years in the finance industry, I rose to the level of Assistant V.P. with Chase Manhattan. While working for Chase, I decided that I wanted to have residual income without having to quit my job. I bought my first apartment building in 1996, three days before my wedding. In 2001, I decided I would leave the corporate world and work for myself in a net branch environment. My passions are helping people get commercial mortgage loans. I also am passionate about investing, working out and being with my family and friends.

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