Nation’s Restaurant News: Capital squeeze

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With financing still hard to secure, some brands explore  nontraditional lendingBank of America and GE Capital are currently running TV commercials touting  their lending partnerships with clients — Pink’s Hot Dogs and Wendy’s franchisee  Bridgeman Foods, respectively — but ask most operators today whether they can  easily secure a loan, and the answer will be no.

Annual chain restaurant loan originations are still below 2008 levels,  according to Restaurant Research LLC, a restaurant data analysis firm in Redding  Ridge, Conn. Loan originations totaled about $7.1 billion in 2007, then fell to  $4.5 billion in 2008, and have since then dipped even further, hitting $3.0  billion in 2009. During 2010 and 2011, total originations showed an uptick — to  $4.0 billion and $4.3 billion, respectively — but are still below prior levels.

The lack of growth financing means many operators can’t secure enough capital  to expand into new markets, open units, remodel existing ones or purchase  equipment for new menu items.

“Access to capital will remain the No. 1 issue for franchising in 2012,” said  Stephen J. Caldeira, president and chief executive of the International  Franchise Association. “While there has been a bit of a thaw for both big and  small businesses, there is a long way to go.” 
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