GE Capital Curtails New Restaurant Franchisee Lending

EasyBourse.com:

GE Capital ’s franchise finance arm is becoming more stringent in pricing and issuing loans for new franchisees, a pullback by one of the largest lenders to restaurant operators in the latest sign that Wall Street’s turmoil is spreading to small businesses.

While GE Capital spokesman Stephen White stopped short of saying there was a total freeze on lending to new franchisees, he said the franchise finance arm has become more critical in initiating new loans but continues to do business with existing customers.

“We are still active in the restaurant industry and we continue to quote deals where it’s competitive and appropriate,” White said. “In this environment, we’re taking a longer look and even a closer look than we have in different times and that just makes sense.”

Stephen Vaughan, chief financial officer of Sonic Corp. (SONC), told Dow Jones Newswires Thursday that franchisees of the drive-in chain have been notified by GE Capital’s franchise finance arm that it will temporarily stop financing new loans to Sonic franchisees. GE Capital is one of Sonic’s approved lenders.

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