The SBA Loan Guide Every Prospective Franchisee Should Read

The SBA 7(a) is the workhorse of franchise financing. Up to $5M, terms up to 10 years for working capital and 25 years for real estate, and rates currently in the prime + 2.75–4.75% range. If your chosen brand is on the SBA Franchise Directory (most major brands are), the bank's underwriting time drops by weeks.

What lenders actually look at

• Liquid capital: at least 20–30% of total project cost in cash that's easy to verify
• Credit score: 680+ is the soft floor; 700+ gets you better rates
• Industry experience: not required, but transferable management experience helps
• Net worth: typically 1.5–2x the project size, including home equity
• Collateral: SBA wants to be fully collateralized when possible — usually a lien on home equity
• Personal guarantee: required from anyone owning 20%+ of the business

The timeline (be realistic)

From signing the engagement letter with your lender to funds in your account is typically 60–90 days for a Preferred Lender and 90–120 days for a non-PLP bank. Start the conversation with lenders the same week you start FDD review — these tracks run in parallel.

The three most common reasons applications die

• Cash injection comes from a source the SBA won't accept (e.g., another loan)
• Personal financial statement doesn't reconcile with tax returns
• Business plan financial projections aren't supported by the brand's Item 19

Pick a franchise-specialist lender, not your local bank

Bank-of-America-down-the-street has technically heard of SBA loans. But banks that specialize in franchise lending (Live Oak, Huntington, Celtic, Byline) close 5–10x more franchise deals per year and know which brands underwrite cleanly. They'll also push back on a weak deal before you waste 90 days. We can introduce you to two or three specialists who have funded the brands you're considering.