Women and minorities being denied business loans is a huge problem. This franchise tried a new training program and now has a 100% approval rating for various franchisees.

Image credit: Zohar Lazar

Bedel Mbaya speaks six languages: English, Spanish, French, Swahili, Portuguese and Lingala. But for some reason he seemed unable to communicate with the bankers.

At the start of 2021, he was a 27-year-old carpenter with a long history of hard work, and he needed $45,000 for a franchise with waste hauling company Junk Chuckers. He met all the paper requirements for a loan, had the backing of Junk Chuckers, and was determined to become an entrepreneur.

Yet at least four times the banks have rejected it. They gave no explanation, but he was pretty sure he knew their reasons.

“I thought it was my race and my age,” says Mbaya, who speaks with a Congolese accent. "I was trying to speak slowly, but what was going through my mind was that they couldn't understand me."

In this, Mbaya was not alone. The IFA Foundation, which is the nonprofit partner of the International Franchise Association, describes this type of problem as "pervasive": women, people of color and prospective franchisees under 30 all regularly struggle. to access capital. It's a common topic in franchise circles, and franchise executives hear about it from lawmakers in Washington, D.C., especially those who are members of the Congressional Black Caucus and live in predominantly black and Hispanic districts. p>

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“They always say their constituents tell them they have a hard time getting capital,” says Rikki Amos, executive director of the IFA Foundation.

That's why the IFA Foundation, along with the founders of many franchise-related entities, are working on ways to address this issue. Industry-wide, many brands offer a way to support potential franchisees from historically disadvantaged communities — with programs as varied as the franchise accelerator programs at the University of Louisville and the University Howard, both sponsored by Yum! More targeted brands or programs such as Choice Hotels' women-centric initiative called "HERtels by Choice". (For more such programs, see our list on page 109.)

But as franchise executives dig into the issue, they discover an important nuance: while racism, sexism, and ageism certainly are a problem in some cases, they are not. not always". the reason why franchisees in these communities are rejected. The real problem, sometimes, is a lack of communication and resources.

For example, Junk Chuckers has developed a program to bridge the communication gap. From now on, each aided candidate was able to obtain a loan, regardless of gender, race or age. This includes Mbaya, who today says he has a better understanding of the problem he faced.

The trick, he said, was that he had to add a seventh language to his repertoire: he had to learn to speak banker.

“There is a way to talk to businessmen,” says Mbaya. "There are questions you should ask. If there's something you don't understand, you need to ask so you understand exactly what's going on. I learned to ask why I wasn't approved. What do I need to do to get approved?"

When Al and Shamairah Noufaro started Junk Chuckers in 2018, they themselves faced discrimination. Al is of Indian descent, Shamairah is Trinidadian, and they felt regularly challenged and dismissed as they worked to build their business.

Shamairah recalls trying to get a loan from a bank she had chosen specifically because its marketing appealed to many women. This bank, she thought, would particularly support her. "They asked for a business plan. I gave them a business plan," she recalls. "They asked for a cash flow statement, and I gave them a five-year cash flow statement. They wanted credit scores, and I had a perfect credit score. Then they would each ask their manner: "Where is your husband? "

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When Noufaro started offering Junk Chuckers in 2020, they intentionally sought...