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Franchisees Struggle with Skittish Lenders

New York--Franchise lenders are hesitant and demanding, and the reasons why aren't hard to find. Fitch Inc. reports the asset-backed franchise financing market was largely dormant in the first quarter, as cumulative defaults totaled $1.7 billion. Many newly defaulting borrowers were in the quick-service restaurant or convenience-store businesses, the credit-rating service says.

Similarly, the SBA says the delinquency rate for its business-loan programs remains high--7.9 percent of loans outstanding as of June 30. At the same time, the SBA is being asked by nervous banks and other lenders to guarantee more loans. -The Wall Street Journal Online

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