While the number of loan approvals by the SBA for franchise businesses has fallen in Nebraska over the past three fiscal years, there is a strong and encouraging sign within the overall data for entrepreneurs seeking to open a new franchise in Nebraska.
Typically, new businesses make up 33 to 40 percent of total loan volume in any given fiscal year; yet with franchises, the Nebraska District Office has seen a much higher percentage of loans and loan volume going to new businesses than existing franchise operators.
That percentage of new versus existing franchise operators securing an SBA guaranteed loan moved from 53 percent in Fiscal 2009, to 48 percent in FY ‘10, back up to 64 percent in FY ‘11.
That larger percentage for new franchises is seen as good news, because when it comes to franchises, entrepreneurs that have been able to get SBA financing are encouraged enough by the direction of the economy in Nebraska to take the plunge.
Most importantly, those franchise owners who use SBA loans are creating jobs and keeping existing employees on the payroll: since Oct. 1, 2009, all franchises using SBA financing have created nearly 600 new jobs in Nebraska and kept more than 700 additional people employed.
The numbers themselves tell a positive story for new franchise operators:
In Fiscal 2009, there were 100 loan approvals to franchises, with 53 of those to new franchise businesses, for a total of $30.3 million in loan volume. These loans helped create 433 new jobs statewide, and keep 749 jobs on payrolls.
In Fiscal 2010, as the economic downturn deepened, the number fell to 45 loan approvals to franchises, but 22 of those went to new franchise businesses. The total of $17.8 million in loan volume that year directly led to the creation of 359 new jobs and kept 426 existing jobs on payrolls in the state.
Twenty-eight loan approvals went to franchise businesses, with 18 to new operators, for a total of $9.09 million. SBA-backed financing helped create 167 new jobs and were responsible for keeping 267 jobs in the state.
For the first quarter of Fiscal 2012, the Nebraska District Office saw similar rates of activity. There were five approvals for franchise businesses; three went to new ones for a combined $612,000 in loan volume. These efforts helped to create 31 jobs and keep 15 in the state.