Franchise Financing

Finding the right financing option can be a frustrating process without knowing your options. We have put together valuable information and resources, which will help you through the process. 

1. SBA Financing

The U.S. Small Business Administration (SBA) guarantees loans for private banks/lenders. Programs include the popular 7(a) loan for up to $100,000.

2. Non-SBA and Specialty Financing

There are commercial lenders that specialize in franchise financing through equipment leases and structured term loans. There is also the ERSOP program, using your 401k or IRA as start-up capital without penalties, taxes or distributions.

3. The Franchisor

Many franchise companies either offer financial assistance themselves or help franchisees find a bank or other lender. Most have a list of "preferred lenders".

Personal Assets

Whether it's SBA or non-SBA financing, anywhere from 15% to 30% of the total capital need can be required of the borrower. Franchise start-up costs vary wildly across franchises, so this could be anywhere from $20,000 to $200,000. A borrower may need to refinance their personal property or liquidate stocks, bonds, IRAs, 401k, etc.