Franchisor-Assisted Financing

Franchise Times:

When he purchased his second Snip-its, Brian McMullin assumed he’d have no trouble getting financing. He has an MBA, a long corporate finance career and he and his wife are solid members of their community.

“We applied for an SBA-guaranteed loan at our local bank,�? he said, “but the SBA officer in Houston did not approve of the Snip-its’ ( a children’s hair salon concept) franchise agreement. I then took our dog-and-pony show to several other banks, but they all turned me down for conventional loans because Snip-its was such a new franchise. We were on the line. If we didn’t get financing, we couldn’t move forward, so I started researching the SBA approval process.�?

McMullin’s research took him all the way to the SBA general counsel’s office in Washington, D.C., where the agency’s top attorney agreed to read the Snip-its Uniform Franchise Offering Circular himself. He overruled the Houston district office and, three months after they’d first applied, the McMullins got their financing from the bank with which they’d started.

Their ordeal convinced Derek Skaletsky, Snip-its vice president of franchising, to get his franchise on the elegantly simple SBA registry, one of several ways franchisors help new franchisees get financing.