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Why is Franchise Lending So Tight?

Category: Franchise Law Small Business Publish on Aug 29 2011

These days, franchise loans are hard to come by. Business Insider recently published an article asserting this problem exists – at least in part — because the Federal Reserve is quietly continuing a bailout program initiated during the financial crisis in which it pays big banks interest on their excess reserves.


In other words, the Federal Reserve is paying banks to not lend money. Business Insider CEO, Henry Blodget, says this is “one of the most outrageous ‘open secrets’ of U.S. government policy these days.”

This is one of many explanations for why lending is tight right now. Check out the article, and see what you think as a franchisor or franchisee doing business in today’s economy.