Matt Shay, President & CEO of the International Franchise Association

Matt Shay, President & CEO of the International Franchise Association

The International Franchise Association urged the federal government on Tuesday to help keep CIT Group Inc., one of the largest small business lenders, solvent during its current liquidity crisis.

Earlier this week CIT Group said it “remains in active discussions with its principal regulators on a series of measures to improve the company’s near-term liquidity position,” including talks surrounding a possible bailout from the federal government. Reports have said the lender could face bankruptcy should it not receive an infusion of capital.

New York-based CIT Group, which was the No. 1 Small Business Administration lender in 2008, with 1,195 loans totaling $766.6 million, was an active restaurant industry lender until last fall. As the credit crisis gathered momentum, CIT Group pulled back on new lending to small businesses. Similar moves by other national lenders, like GE Capital, led to a credit freeze for many restaurant companies, and the lack of capital has stalled industry growth.

“Providing critical assistance to a substantial SBA lender such as CIT … seems a prudent use of government assistance during this challenging time,” said IFA president Matt Shay. “We believe that a program of broad federal support for increased franchisee borrowing will result in a significant benefit to the U.S. economy.”

In addition to the request for help with CIT, the IFA has also supported government moves to make SBA lending easier through the reduction of borrower fees and the federal guarantee of up to 90-percent of the loan.

While the government works to turn bank lending back on, franchisors such as Papa John’s, Brueggers and Quiznos each have introduced micro-lending or royalty relief programs for franchisees.

Nations Restaurant News

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