If you’re looking to borrow money for your business these days, go in armed with sterling credit, a top-notch business plan and several years of successful operations. Nearly 70% of U.S. banks reported that in late 2008 they had tightened lending standards on commercial and industrial loans to small firms, according to the Federal Reserve.
Money hasn’t dried up for everyone, however. “I don’t see the issue as one of credit availability for good customers,” says Doug Freeman, executive vice president at BankAtlantic in Fort Lauderdale, adding, “Competition between me and my fellow bankers is very intense.”
Indeed, Tad Ihns, founder of Pensacola-based Avalex, a maker of flat panel displays, mapping systems and other products for military and law enforcement aviation systems, purchased a “couple hundred thousand dollars” worth of new equipment in December 2008. Working with Wachovia, Ihns says, “We were able to easily get a loan for that.”
To spur lending, the federal government’s Troubled Asset Relief Program (TARP) has injected billions of dollars into banks since October 2008. More important to small businesses, the Federal Reserve’s $1 trillion Term Asset-Backed Securities Loan Facility (TALF) is designed to improve the secondary market for small business loans, a move that will make it easier for lenders to sell their loans and use the proceeds to make more loans.
Closer to home, Gov. Charlie Crist has asked the Florida Legislature to provide $10 million for a pilot loan program. It would give businesses with 10 to 99 employees a 2% loan of up to $250,000 for five years. Another program already enacted, the Florida Opportunity Fund, will provide state funding to venture capital companies that agree to match the money and invest in Florida-based startups.
[Photo: Eileen Escarda]
Kidokinetics - Weston
Founder and President: Terri Braun
Business: Children’s athletic and fitness programs
How it is Financing Growth: Franchising
McDonald’s, Ace Hardware, Merry Maids and dozens of other well-known companies have used franchising to grow into nationwide powerhouses. But smaller companies such as Weston-based Kidokinetics also are using franchising to generate revenue and expand their reach.
Kidokinetics founder Terri Braun grew up in South Africa and competed in karate internationally before moving to Florida and setting up her company in 2000. Her idea is to introduce kids to sports in a noncompetitive way. “Not every child needs to be the best,” says Braun.
Working through schools and parks, Braun and her coaches run 45-minute classes that teach kids ages three to 12 a bit about a variety of different types of fitness. The classes can include basketball, hockey, relay races, tennis, stretching, volleyball, obstacle courses and more.
After six years of running Kidokinetics, Braun wanted to expand beyond south Florida, where the company conducts programs at 80 locations. She began looking at franchising. “I just felt that by the requests I was getting, there were so many people out there” who were interested in the program, she says.
Working with a consultant, it took Braun about a year to prepare the legal, financial and organizational documents for the franchise offering. Braun charges a $30,000 franchise fee and receives monthly royalties of 6% on the franchisee’s revenues. She sold her first franchise in February 2008 to a Dallas entrepreneur and the second in September 2008 to the same person for a nearby territory.
Although the credit crunch has impacted franchise sales, Braun says she’s getting more inquiries from people who have been downsized and are interested in going out on their own.