Business funding for franchise owners
Opening a franchise means paying the franchise fee, funding a build-out that usually has to meet the franchisor's specifications, and often waiting on the franchisor to approve your financing plan before you can move forward. Government-backed loan programs are worth checking early, since some are built around exactly this kind of start-up cost, but they take longer than private financing.
- One application, several lenders
- No credit pull to see your options
- No fee to you, ever
Common funding needs
- Paying the initial franchise fee
- Building out the location to the franchisor's specifications
- Buying required equipment and fixtures
- Working capital to cover the first months of operation
What usually fits
Products that usually fit
- Government-backed loans often built for franchise start-up costs, if you can wait on the process and get franchisor and program approval.
- Term loan for the build-out and franchise fee together.
- Equipment financing for required equipment and fixtures.
- Working capital for the first months before revenue is steady.
Compare term loans, lines of credit, cash advances and equipment financing side by side →
Illustrative example
A worked example
A new franchisee needs $150,000 to cover the franchise fee, build-out and initial equipment. As a term loan over 7 years at an illustrative 9-20% a year, payments run about $2,413–$3,331 a month, or $202,722–$279,798 total.
A government-backed loan for the same amount can sometimes offer a lower down payment and a longer term, but expect a longer approval process and paperwork tied to both the program and the franchisor's requirements.
Illustrative example only, not an offer or a quote. Rates, fees and terms are set by each lender and depend on your business. Fees are not included unless stated.
Underwriting
What lenders look at
- Franchisor approval and any franchisor-required financing documents
- The franchise disclosure document and build-out budget
- Owner credit, since new franchises have no operating history yet
- Available down payment or equity into the project
- Experience in the industry, if the franchisor requires it
Honestly
Who this is not for
- A franchise the franchisor has not approved the buyer or financing plan for yet
- A build-out budget with no contingency for cost overruns
- Expecting a government-backed loan to close quickly: the process usually takes longer than private financing
If borrowing does not make sense, we will say so.
Are you a match?
Lender network minimums
Close but not quite there? Apply anyway and we will tell you honestly what is possible.
*Best available terms from lenders in our network. Every lender sets its own criteria; approval, amount and funding time are decided by the lender and not guaranteed.
| Time in business | 1 year+ |
|---|---|
| Monthly bank deposits | $20,000+ |
| Credit score | 500+ |
| Bank account | Business |
| Fee to you | $0 |
| Credit pull to start | None |
FAQ
Franchises funding questions
Does the franchisor need to approve my financing?
Often, yes. Many franchisors require the franchisee's financing plan to meet certain terms before approving the location. Check your franchise agreement.
Are government-backed loans good for franchise start-ups?
They can be, with longer terms and sometimes a lower down payment, but the approval process takes longer than private financing.
Can I finance just the equipment and not the franchise fee?
Yes, equipment financing can cover just the required equipment and fixtures if that is a cleaner fit.
What if I have no experience in this industry?
Some franchisors provide training that lenders accept in place of direct experience. Tell us what the franchisor requires and we will match it to lenders.
Guides
Guides for franchises
Related
Similar businesses
Manufacturing · Wholesale & distribution · Agriculture
Where we work: all US states · all Canadian provinces
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