Franchisees Struggle with Skittish Lenders

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

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

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