By Janean Chun
After a lengthy, sometimes controversial process, the Small Business Administration (SBA) recently created a central registry for franchises, the system by which franchisees would be deemed eligible for SBA-guaranteed financial assistance. Previously, franchisees would apply for loans with SBA attorneys in district offices, which resulted in problems including delays and inconsistencies in the approval process.
The new procedure should be faster and more efficient than the old way, says Ronald Matzner, SBA's associate deputy general counsel. "Instead of waiting weeks for an eligibility decision," he says, "the franchisor and franchisee will get a response within hours."
The registry is the result of an almost yearlong debate between the SBA and franchisors, franchisees and lendors, which was spurred by the SBA's initial proposal: that franchisors sign a supplemental agreement to their loan application addressing eligibility issues.
Though the registry, which should be up and running this month, is different than the SBA originally envisioned, Matzner is satisfied with the results. "The industry really did come up with a better program than we started out with," he says. "It streamlines the process, which is all we really [wanted] to do. I think it will certainly benefit franchisors and franchisees mutually."