Ways to Get Franchise Financing

The main ways to get franchise financing are SBA 7(a) and Express loans, franchisor in-house or preferred-lender programs, equipment financing, ROBS (using retirement funds), traditional bank and credit-union loans, and revenue-based funding for franchises that are already open and generating deposits. Which one fits depends on three things: whether you are opening a new unit or funding an existing one, how fast you need the money, and whether your approval will lean on credit and collateral (bank/SBA) or on bank-deposit revenue (revenue-based). New-unit buildouts almost always start with SBA and franchisor programs because of the size and low rate; open, revenue-generating locations that need working capital in days lean toward revenue-based funding, where approval is driven by your deposits and monthly revenue rather than your credit score.

Below is how each path actually works from the underwriting side — the documents, the timelines, the credit and revenue thresholds, and a decision framework for when each one is the right call versus when to walk away.

SBA 7(a) and SBA Express: the default for new-unit buildouts

The SBA 7(a) program is the workhorse of franchise financing for a reason: loan amounts up to $5 million, long amortization (up to 10 years for working capital, up to 25 for real estate), and rates tied to Prime plus a capped spread. Most nationally recognized brands appear on the SBA Franchise Directory, which is what makes a franchise SBA-eligible in the first place — always confirm your brand's directory listing before you start.

Expect a real underwriting process. Lenders want a personal credit score generally in the 680+ range, a down payment or equity injection commonly around 10-20% of the project cost, a business plan with unit-economics projections, and full personal financial disclosure. SBA Express is a faster, smaller-dollar variant (up to $500,000) with a lighter turnaround but a lower SBA guarantee.

Timeline reality: from complete application to funding, 30-90 days is normal. That is fine when your buildout is months out anyway. It is a poor fit when a landlord, equipment vendor, or franchisor deadline is measured in weeks.

Franchisor programs and preferred-lender networks

Many franchisors either offer direct financing (often for the franchise fee or equipment) or, more commonly, maintain a network of preferred SBA lenders who already know the brand's unit economics. That familiarity matters: a lender who has funded 200 units of the same concept underwrites faster and with fewer surprises than one seeing your brand for the first time.

Ask your franchise development team three questions: Do you offer any in-house financing or fee deferral? Who are your preferred lenders? And is the brand on the SBA Franchise Directory? Some franchisors also offer incentives — reduced fees or development support — for veterans, multi-unit operators, or specific growth markets. These programs rarely cover 100% of project cost, so treat them as one layer of the capital stack, not the whole thing.

Equipment financing and ROBS for the buildout

Equipment financing is collateralized by the asset itself — ovens, POS systems, vehicles, HVAC, signage. Because the equipment secures the loan, approval is often easier than an unsecured loan, and terms typically run 3-7 years to match the asset's useful life. This is a clean way to fund the physical buildout without tying up your SBA proceeds meant for working capital.

ROBS (Rollover for Business Startups) lets you fund a franchise using existing 401(k) or IRA balances without an early-withdrawal penalty, by rolling them into a new C-corp retirement plan that buys company stock. It is real equity, not debt, so there is no monthly payment — but it puts retirement savings at risk and requires a specialized administrator and strict ongoing compliance. Treat ROBS as a serious, professionally-administered strategy, never a casual move.

Revenue-based funding for open, revenue-generating franchises

Once a location is open and running deposits through a bank account, a different door opens. Revenue-based funding — offered through an MCA/revenue-based marketplace — approves on your bank deposits and monthly revenue rather than your credit score. This is the practical answer for an existing franchisee who needs working capital fast: covering a slow season, funding a remodel the franchisor now requires, buying inventory ahead of a promotion, making payroll through a gap, or bridging to a second unit.

Typical marketplace parameters: minimum funding around $10,000, personal credit as low as FICO 500+, and funding in 24-48 hours once the file is complete. Repayment flexes with cash flow — a fixed small daily or weekly remittance rather than a large monthly note — which is why it suits businesses with steady card and deposit volume. It is more expensive than an SBA loan, and it is never guaranteed; approval and amount depend on what your deposits actually support. Used deliberately for a revenue-generating purpose with a clear payback window, it is a cash-flow tool, not a rescue. For how the product works end to end, see our merchant cash advance overview.

Decision framework: which franchise financing path fits

Match the tool to the situation rather than chasing the lowest rate in a vacuum. The cheapest capital you cannot get in time is worth nothing.

Works best when:

• SBA 7(a) / Express — you are opening a new unit, have 680+ credit and an equity injection, and your timeline is 30-90 days out. Lowest cost, largest dollars.
• Franchisor / preferred lender — your brand is on the SBA Directory and offers a lender network; use it to speed underwriting and stack incentives.
• Equipment financing — the need is specifically hard assets; keep your working-capital cash free.
• ROBS — you have substantial retirement funds, want equity not debt, and will administer it properly.
• Revenue-based funding — your location is already open with steady deposits, and you need working capital in days for a revenue-generating purpose. Credit is thin (500+) but revenue is healthy.

Avoid when:

• Don't force SBA when a vendor or franchisor deadline is weeks away — you will miss it.
• Don't use revenue-based funding to cover a chronic shortfall or a location whose unit economics are broken — flexible repayment still comes out of the same thin cash flow, and it compounds the problem.
• Don't tap ROBS if losing that retirement balance would be catastrophic to your household.
• Don't stack multiple short-term advances at once to substitute for capital you should have raised as term debt.

Example scenarios and typical parameters

Illustrative only — every file is underwritten on its own deposits, credit, and brand. Figures are labeled "for example" and are not offers.

Documents and timeline: what actually moves a file

The single biggest driver of speed is a clean, complete file. Underwriters do not wait on you out of preference — they wait on missing paperwork.

For SBA and bank loans, assemble early: three years of business and personal tax returns, year-to-date financials (P&L and balance sheet), a business plan with projections, the franchisor's FDD, your personal financial statement, and proof of your equity injection. Gaps here are what stretch a 30-day approval into 90.

For revenue-based funding, the file is deliberately lighter: typically the last 3-6 months of business bank statements, a completed one-page application, and basic business verification (voided check, ID). Because approval is driven by deposits, there is no lengthy tax-return or projection review, which is exactly why funding lands in 24-48 hours. Consistent daily deposits, minimal negative days, and stable monthly revenue are what get you the strongest offer. If you want the working-capital angle in depth, read our MCA and revenue-based funding overview before you apply.