Franchise Financing

Grow Your Franchise Business

Are you ready to enter the business world as a new franchisee? Or perhaps you want to add another location to your business. You need to have sufficient funding to succeed but if don't, you may be able to qualify for franchise financing through the SBA 7(a) program or other options. With your financing in place, you will be able to succeed in your important new endeavor.

Business Meeting
 

Assistance with SBA 7(a) Franchise Financing

The SBA 7(a) loan program for a typical business acquisition also applies to the purchase of a franchise business. This franchise financing program is similarly structured to be very generous to borrowers with features such as:

  • Extra cash on top of acquisition purchase price funding that can be used for the purposes of working capital or equipment purchase

  • As much as 90% loan-to-value meaning your cash down payment may be as low as 10% (unheard of outside SBA loan programs)

  • Terms as long as 25 years (if real estate included)

  • Low interest rates that may even be FIXED for the entire term

  • Light/no prepayment penalties

  • Fast commitments and rapid closing time

  • The loan proceeds can be used to fund the franchise business but more funds can be added to supply sufficient working capital or to procure key equipment

Do you already own a franchise but are just looking for funds for a location renovation/refresh (as periodically required by the franchisor)? Then consider a working capital loan or line of credit for this purpose.

 

Business Experience Requirements in Franchise Financing

First-time franchise owners are frequently approved, so don’t hesitate if you have not gone down this path before. Please note there should be some degree of translatable business experience on your part related to the particular type of franchise. Also, there are usually preferred franchise brands for lending, hence those get the best rates and terms whereas some franchise brands (i.e. those having a limited number of national locations) may not qualify for SBA loan programs for particular lenders.

Please note that start-up businesses (either a franchise or non-franchise) may be considered for SBA 7(a) financing but normally this requires a very strong business case along with a 30% down payment by the buyer (70% LTV) as well as two years of direct business experience in the same industry.