Franchisors in need of a national loan program for franchisees will want to check with CIT Bank - Small Business Lending (SBL)headquartered in Livingston, N.J. As a Small Business Administration (SBA)preferred lender (PLP), CIT Bank - Small Business Lending has a large portfolio of loans to franchise businesses, says Doug Bagnasco, National Account Manager. Within recent years, CIT Bank - Small Business Lending has been especially interested in providing financing to the franchise industry.

Franchising appeals to CIT Bank - Small Business Lending because we have determined that franchising "has a higher track record of success," than some other industries, he explains. In addition, Bagnasco points out that the loans that "tend to perform the best have solid franchise concepts behind them."

As a result, CIT Bank - Small Business Lending is always looking to form "new relationships with franchisors to establish national loan programs" for both business startup and expansion. With such a program in place, the franchisor can send franchisees in need of financing directly to CIT Bank - Small Business Lending to apply for a loan. CIT Bank - Small Business Lending has the infrastructure in place to screen new franchisees for financing, walk them through the application process all the way to funding and provide the franchisor reports of loan referral activity on a quarterly basis

A national loan program helps streamline the lending process, says Bagnasco. "The franchisor doesn’t feel like they’re back at square one with a lender each time a franchisee is searching for financing."

Under such a program, CIT Bank - Small Business Lending "would be able to set up a financing structure of up to 85 percent financing for their franchisee," he says. The franchisee would have to come to the table with the remaining 15 percent in the form of un-borrowed cash.

Once a national loan program is in place, the franchisor would have "the general parameters of what an ideal candidate looks like for CIT Bank - Small Business Lending." This way, the franchisor understands which potential franchisees are likely to win loan approval.

SBA has gained a greater position in today’s lending environment. In addition, it has become "a much more streamlined process, which allows lenders to expedite the approval process," says Bagnasco. Typically once CIT Bank - Small Business Lending has underwritten the package and has submitted the application to the SBA, it can obtain a loan number in 24-48 hours.

As a SBA-preferred lender, CIT Bank - Small Business Lending provides loans under the 7(a) program and the 504 Certified Development Company Program. With 7(a), loans go to small businesses unable to secure financing on reasonable terms through normal lending channels. The maximum amount the SBA can guaranty under the 7(a) program is generally $1,000,000. Keep in mind that repayment ability from cash flow of the business is a primary consideration in the loan decision process.

Bagnasco says CIT Bank - Small Business Lending is "the largest 7(a) lender in the nation, having approved over 1,000 SBA-backed loans in fiscal year ending Sept. 30, 2000.

CIT Bank - Small Business Lending also offers SBA-backed 504 loans. Under this program, small business can apply for long-term, financing for major fixed assets, such as land and buildings.

Typically, a 504 project combines a loan from a commercial lender covering up to 50 percent of the project cost, a contribution by the borrower of at least 10 percent, and a loan funded by a Certified Development Company made possible through the sale of 100 percent SBA-backed securities for the remaining amount. A certified development company is a nonprofit corporation set up to contribute to the economic development of its community.

For franchisees that borrow funds to purchase real estate, it is possible to pay back the loan over 25 years. Without real estate, loan maturity ranges from seven to ten years. The SBA-backed loans offer "a much longer amortization than a conventional loan," says Bagnasco and "this really reduces the level of risk by reducing the monthly payments."

CIT Bank - Small Business Lending has 65 regional account managers throughout the U.S. to work with franchisors. To contact CIT Bank - Small Business Lending, call 1-800-713-4984 or visit them on the web at www.FranchiseLender.com.