WHAT WILL IT TAKE FOR YOUR FRANCHISEE TO LAND THE LOAN

Moderator: Mike Rozman BoeFly.com Co-president & Chief Strategy Officer Richard Bradshaw TD Bank EVP, Director of SBA Lending Darrell Johnson FRANdata President & CEO

Patrick Kelley Small Business Administration Special Advisor David Nilssen Guidant Co-Founder & CEO

STATE OF FRANCHISE LENDING TODAY

• State of franchise lending today • Tips, tricks and tactics to unlock the

credit box • How important are unit economics and

franchise system credit worthiness? • Helping franchisees become bank-

ready borrowers • Leveraging technology • Alternative funding sources

STATE OF FRANCHISE LENDING TODAY

-2.69% Dec 2012

STATE OF FRANCHISE LENDING TODAY

TIPS, TRICKS AND TACTICS TO UNLOCK THE CREDIT BOX

• Start-up vs. Existing Businesses • Conventional vs. SBA

– SBA: Key programs for franchising; new programs – Small Loan Advantage

• Role of Brokers vs. DIY • Data points on funded deals

TIPS, TRICKS AND TACTICS TO UNLOCK THE CREDIT BOX

• Role of Franchise Registry – SBA Eligibility – Credit Underwriting – Franchise System and Lender Search Tools

• Franchise Registry Activity Last 6 Mos – >300,000 Unique Lender/Zor/Zee Visits – >4,000 Lenders Registered – >3,500 Active Franchise Systems Listed – >1,000 BCR Requests

• Franchise SBA Eligibility Reviews – Over 1,600 Franchise Brands Approved

SBA – SMALL LOAN ADVANTAGE VOLUME

TIPS, TRICKS AND TACTICS TO UNLOCK THE CREDIT BOX

• Data points on funded deals; a sample of 100 funded loans on BoeFly – Avg. Personal Credit Score: 759 – Avg. Equity Injection: 26.28% – Avg. Collateral Coverage

• Start-up: 76% • Existing: 122%

– Avg. Number of Supporting Docs: 12

HOW IMPORTANT ARE UNIT ECONOMICS AND FRANCHISE SYSTEM CREDIT WORTHINESS?

• Banker perspective • Tools to help determine brand

creditworthiness –FDDs –SBA default data –Credit reports

HELPING FRANCHISEES BECOME BANK READY

• Be prepared with a serious, bank-ready set of documents

• Leverage existing banking relationships and actively find new matching lenders

• The more lenders you engage the better your ultimate terms

LEVERAGING TECHNOLOGY

• Benefits to look for: – Helping franchisees be back-ready – Franchisor visibility into the financing pipeline – Efficiently being connected with a wide array

of matching lenders – Consider pricing model and the impact of

brokerage fees – Sharing information about the brand with

lenders in an FTC compliant manner – The role of credit scoring

• Build vs. Buy

ALTERNATIVE FUNDING SOURCES

• Brand-driven financing – Brands using their own balance sheet – Brands establishing programs

• 401k Rollover Product • Brokerage Leverage Lines • Merchant Cash Advance