Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
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Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
NerdWallet's content is
fact-checked for accuracy, timeliness, and relevance by humans.
It undergoes a thorough review process involving writers and editors to ensure
the information is as clear and complete as possible. Learn more by checking
our
Editorial Guidelines.
Content was accurate at the time of publication.
Why trust NerdWallet
250+ small-business products reviewed and rated by our team of experts.
80+ years of combined experience covering small business and personal finance.
50+ categories of the best business loan selections.
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
Advertiser disclosure
You’re our first priority.
Every time.
We believe everyone should be able to make financial decisions with
confidence. And while our site doesn’t feature every company or
financial product available on the market, we’re proud that the guidance
we offer, the information we provide and the tools we create are
objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence
which products we review and write about (and where those products
appear on the site), but it in no way affects our recommendations or
advice, which are grounded in thousands of hours of research. Our
partners cannot pay us to guarantee favorable reviews of their products
or services. Here is a list of our partners .
With franchise startup costs ranging anywhere from $20,000 to $1 million, according to the International Franchise Association
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
SBA 7(a) loans stand out as an affordable option for businesses that can’t qualify for bank financing, but still have good credit and finances. 7(a) loans offer low interest rates, long repayment terms and large funding amounts. These loans can also be used for a variety of purposes, including working capital, business expansions or purchasing equipment and supplies.
For-profit U.S. business.
Unable to access credit on reasonable terms from nongovernment sources.
Financial qualifications determined by individual lender.
SBA 7(a) loans stand out as an affordable option for businesses that can’t qualify for bank financing, but still have good credit and finances. 7(a) loans offer low interest rates, long repayment terms and large funding amounts. These loans can also be used for a variety of purposes, including working capital, business expansions or purchasing equipment and supplies.
For-profit U.S. business.
Unable to access credit on reasonable terms from nongovernment sources.
Financial qualifications determined by individual lender.
iBusiness Funding also offers SBA loans up to $5 million.
Cons
Charges an origination fee.
Must be in business for a minimum of 24 months.
Minimum credit score is higher than some other lenders.
iBusiness Funding is a good option for qualified business owners who don’t want to wait for bank financing. The lender offers competitive interest rates and long repayment terms, but can fund much more quickly than traditional lenders. And with a large maximum funding amount, this loan can be used for a variety of long-term expansion projects, as well as refinancing existing debt.
iBusiness Funding also offers SBA loans up to $5 million.
Cons
Charges an origination fee.
Must be in business for a minimum of 24 months.
Minimum credit score is higher than some other lenders.
iBusiness Funding is a good option for qualified business owners who don’t want to wait for bank financing. The lender offers competitive interest rates and long repayment terms, but can fund much more quickly than traditional lenders. And with a large maximum funding amount, this loan can be used for a variety of long-term expansion projects, as well as refinancing existing debt.
Cash can be available within the same business day (does not apply in California or Vermont).
Accepts borrowers with a minimum credit score of 625.
Streamlined application process with minimal documentation required.
Can be used to build business credit.
Cons
Cannot fund North Dakota-based businesses.
Requires frequent (daily or weekly) repayments.
Interest rates can be high compared with traditional lenders.
Charges origination fee.
OnDeck’s short-term loan is a good option for making one-time investments in your business, such as opening a new location or renovating your space. This loan offers fast funding (sometimes as quickly as the same day) for borrowers who may not qualify for more traditional financing options. OnDeck’s short-term loan can also be used to establish and build business credit — as the lender reports your payment history to the three commercial credit bureaus.
Cash can be available within the same business day (does not apply in California or Vermont).
Accepts borrowers with a minimum credit score of 625.
Streamlined application process with minimal documentation required.
Can be used to build business credit.
Cons
Cannot fund North Dakota-based businesses.
Requires frequent (daily or weekly) repayments.
Interest rates can be high compared with traditional lenders.
Charges origination fee.
OnDeck’s short-term loan is a good option for making one-time investments in your business, such as opening a new location or renovating your space. This loan offers fast funding (sometimes as quickly as the same day) for borrowers who may not qualify for more traditional financing options. OnDeck’s short-term loan can also be used to establish and build business credit — as the lender reports your payment history to the three commercial credit bureaus.
Offers loans to startups and borrowers with bad credit.
No collateral or down payment required.
Cons
Charges a factor rate that makes it more difficult to compare costs with other lenders.
Requires higher annual revenue than other online lenders.
Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
Charges an origination fee.
National Funding stands out as an online equipment financing option for startups and borrowers with bad credit — provided they have strong revenue. This lender offers equipment loans or leases for new and used equipment, and unlike some equipment lenders, doesn’t require a down payment. Funding can be available in as little as 24 hours.
Offers loans to startups and borrowers with bad credit.
No collateral or down payment required.
Cons
Charges a factor rate that makes it more difficult to compare costs with other lenders.
Requires higher annual revenue than other online lenders.
Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
Charges an origination fee.
National Funding stands out as an online equipment financing option for startups and borrowers with bad credit — provided they have strong revenue. This lender offers equipment loans or leases for new and used equipment, and unlike some equipment lenders, doesn’t require a down payment. Funding can be available in as little as 24 hours.
Can be approved for financing in as little as four hours.
Flexible (daily, weekly or monthly) repayment options.
Can be used to build business credit.
No prepayment penalty.
Cons
Collateral may be required.
High monthly revenue requirements.
Charges an origination fee.
Kapitus stands out for established businesses who want fast funding from an online lender. The lender can approve applications in as little as four hours and issue funds in as fast as 24 hours. Kapitus can also provide large funding amounts compared to online competitors and offers flexible (daily, weekly or monthly) repayment options.
Can be approved for financing in as little as four hours.
Flexible (daily, weekly or monthly) repayment options.
Can be used to build business credit.
No prepayment penalty.
Cons
Collateral may be required.
High monthly revenue requirements.
Charges an origination fee.
Kapitus stands out for established businesses who want fast funding from an online lender. The lender can approve applications in as little as four hours and issue funds in as fast as 24 hours. Kapitus can also provide large funding amounts compared to online competitors and offers flexible (daily, weekly or monthly) repayment options.
Must meet job creation or public policy goals to qualify.
Longer processing times than online lenders.
SBA 504 loans are an affordable option for funding equipment and real estate purchases. These SBA loans offer low interest rates, long repayment terms and large funding amounts. 504 loans also have a fairly low down payment requirement compared to other equipment or real estate loans. To qualify, however, you’ll likely need to be an established business with good credit.
Be a for-profit U.S. business.
Net worth of less than $15 million.
Average net income of less than $5 million for the two years prior to your application.
Financial qualifications determined by individual lender.
Must meet job creation or public policy goals to qualify.
Longer processing times than online lenders.
SBA 504 loans are an affordable option for funding equipment and real estate purchases. These SBA loans offer low interest rates, long repayment terms and large funding amounts. 504 loans also have a fairly low down payment requirement compared to other equipment or real estate loans. To qualify, however, you’ll likely need to be an established business with good credit.
Be a for-profit U.S. business.
Net worth of less than $15 million.
Average net income of less than $5 million for the two years prior to your application.
Financial qualifications determined by individual lender.
Financing available within two business days after approval.
Simple application with minimal documentation required.
Low minimum credit score, time in business and annual revenue requirements.
No prepayment penalties, account maintenance fees or inactivity fees.
Cons
Rates are high compared with traditional banks.
Weekly repayments required over a short term (maximum of 24 weeks).
Fundbox is one of the best online line of credit options for startups. Businesses with just three months in business may be able to qualify. Fundbox is also a good option for borrowers with bad credit and businesses with low revenue. The lender offers a flexible short-term line of credit that can fund within two business days after approval.
Financing available within two business days after approval.
Simple application with minimal documentation required.
Low minimum credit score, time in business and annual revenue requirements.
No prepayment penalties, account maintenance fees or inactivity fees.
Cons
Rates are high compared with traditional banks.
Weekly repayments required over a short term (maximum of 24 weeks).
Fundbox is one of the best online line of credit options for startups. Businesses with just three months in business may be able to qualify. Fundbox is also a good option for borrowers with bad credit and businesses with low revenue. The lender offers a flexible short-term line of credit that can fund within two business days after approval.
Limited information on terms and fees available online.
If you’re looking for franchise financing from a big-name bank, Bank of America can be a worthwhile option. The bank offers specialized franchise financing that can be used to refinance existing business debt, make improvements to a current store or open a new one. To qualify, you’ll need to be an established business with good revenue.
Limited information on terms and fees available online.
If you’re looking for franchise financing from a big-name bank, Bank of America can be a worthwhile option. The bank offers specialized franchise financing that can be used to refinance existing business debt, make improvements to a current store or open a new one. To qualify, you’ll need to be an established business with good revenue.
Minimum credit score: 700.
Minimum time in business: Two years.
Minimum annual revenue: $250,000.
Concerned about tariffs?
Many small-business owners are under increased economic stress and uncertainty following the latest tariff announcements. NerdWallet is here to help you find answers for whatever you're looking for. Here are some resources to help you get started:
Want tips on how to mitigate the impact of tariffs? Read our guide.
What is franchise financing?
Franchise financing is a small-business loan that a franchisee uses to pay for expenses associated with buying, opening and running a franchise. You can use this financing to cover startup and day-to-day expenses without depleting your initial investment or personal savings.
Some franchisors, like the UPS store, allow you to finance one of its franchises without having to find a third-party loan. Others that don’t offer direct financing, like MacDonald’s, have partnerships with many national lenders to help you fund the purchase of a franchise.
Additionally, franchise owners typically need to meet minimum net worth and/or available capital criteria. Ace Hardware, for example, requires franchise applicants to have at least $350,000 in available cash and a minimum net worth of $700,000.
Banks and credit unions can offer a wide variety of loan options for franchise businesses.
Bank of America offers franchise financing including SBA loans. And Balboa Capital (a division of Ameris Bank) will lend to first-time franchise operators. Some banks even have financing programs for specific franchises, like the McDonald’s financing programs offered by Wells Fargo and U.S. Bank.
Bank business loans likely have the most competitive interest rates and repayment terms, but require strict criteria to qualify. You’ll typically need excellent credit and strong finances to get a franchise loan from a bank or credit union. You may also need to put up collateral to secure your financing.
SBA loans are issued by participating lenders, generally banks and credit unions, and partially guaranteed by the U.S. Small Business Administration. When looking for franchise financing, SBA 7(a) loans and SBA CDC/504 loans are options to consider.
SBA 7(a) loans can be used for a range of purposes, whereas SBA CDC/504 loans must be used for large fixed-asset purchases, such as long-term equipment and existing buildings or land. Both have long repayment terms and competitive interest rates.
To qualify for an SBA franchise loan, you’ll usually need good credit and solid finances. Although the SBA no longer regulates which franchises are eligible for funding, SBA lenders may scrutinize the franchise you’re financing.
In order to obtain an SBA loan for franchise financing, lenders must also determine if you meet SBA requirements for all of its loans, which may involve taking a closer look at your personal financials, business size, business plan, collateral and personal and corporate guarantees.
If you can’t qualify for a bank or SBA loan — or need faster funding — online loans can be a good alternative to finance your franchise.
Online lenders generally have more flexible requirements than traditional lenders and can often fund applications within a few business days. These lenders may also be willing to work with startup franchises or business owners with credit challenges.
Online lenders can provide different types of funding, including term loans, lines of credit and equipment financing. Some companies, like ApplePie Capital, even specialize in franchise financing.
Compared to banks and SBA loans, however, online loans typically have shorter repayment terms and higher interest rates.
Financing of some type may be offered by the franchisor. This may include discounted or waived fees, direct financing or partnerships with third-party lenders to help franchisees get loans.
For example, 7-Eleven has an internal program that will provide up to 65% funding on its franchise fee. The UPS Store assists franchisees with accessing capital, and offers a discount on the franchise fee for eligible veteran- and minority-owned businesses.
However, not all franchisors provide funding, and available options vary by company. You can check a franchisor’s website to see if it offers financing for franchisees or reach out to the brand directly for more information.
How to get a franchise loan
The steps you will take to fund a franchise will vary based on that franchise’s specific requirements; however, you can generally expect to follow these steps:
1. Determine the right loan type and amount
Before you put in time and effort to create a loan application, you’ll want to figure out what type of business loan is best and how much capital you need. This should include all the costs associated with opening or purchasing a franchise, including required down payments, the initial franchise fee and any ongoing franchise royalty fees. Typical initial franchise fees can range between $20,000 and $50,000, while ongoing royalties can cost you 5% to 9% annually.
Personal credit score. You can typically qualify for more favorable rates and terms with a higher personal credit score. You can get your free credit report from each of the three major credit bureaus annually.
Time in business. Experience running a business demonstrates that you are more likely to run a successful business, and therefore are more likely to repay your loan.
Annual business revenue. Strong existing finances show lenders that the franchise can support loan payments.
Available collateral. Collateral on a business loan — or assets that lenders can use to cover the loan’s cost in the event of a default — is considered a risk mitigant, and may help you get approved for a franchise loan.
Franchise brand. Lenders may consider the brand and reputation of your franchise, or the one you’re looking to purchase, when making approval decisions.
In addition to these qualifications, you could consider strengthening your application by adding a cosigner to your franchise loan.
3. Research and compare lenders
Once you understand your financing needs and your business’s qualifications, you’ll want to research and compare multiple lenders to find the best fit for your business. You should compare factors such as business loan rates, repayment terms and speed of funding. Banks and SBA loans typically have low interest rates and long repayment terms, but can take a while to fund. If you’re in need of fast funding, you might consider online lenders.
4. Submit your application
Your franchise loan application will vary largely depending on the lender and type of financing you choose. Bank and SBA lenders likely have slower processes with document-heavy applications and may require you to visit a branch location to submit an application in person.
Online lenders, on the other hand, tend to have streamlined applications with minimal documentation.
Generally, however, you’ll need to provide:
Basic information about you and your business.
Details about your franchise, such as your franchise agreement.
If you’re looking to buy commercial real estate or equipment, you’ll also need to provide information and a valuation of the property or machinery you plan on purchasing.
Once you’ve submitted your application, the time to funding will depend on your lender and type of loan. Some online lenders can fund applications within 24 hours, whereas SBA loans can take anywhere from 30 days to a few months to fund.
Whether you’re looking to purchase a franchise or expand with a new location, there are other options if you’re struggling to find a franchise loan that works for you.
Personal loans and HELOCs
Certain types of personal loans, including home equity lines of credit (HELOCs), can be used for business purposes, and may be worth talking to a lender or banker about. Although personal loan amounts may be lower than business loan amounts, they also may come with fewer fees and a faster application process.
Rollovers as Business Startups (ROBS)
Some franchisees use a ROBS, which involves withdrawing money from your 401(k) or other retirement account — often with the help of a lawyer or ROBS provider — to invest in your new business. ROBS can be risky and may require substantial fees, so you’ll want to think carefully before choosing this option.
Friends and family loans
If you have a friend or family member who has the means to invest in your business, you might ask for a loan to help get your franchise off the ground. If someone is willing to offer you a loan, you should draft up a loan document that specifies the details and terms of the family and friends loan in order to separate your personal relationship from your business deal.
Last updated on January 2, 2025
Frequently Asked Questions
Regardless of the brand, you’ll likely need to make a personal investment — as well as acquire funding — in order to finance a franchise. Many franchisors require that franchisees meet net worth and/or startup capital qualifications in order to open a franchise.
If you have limited funds, you’ll need to build up your finances before starting a franchise.
Some of the costs of opening a franchise are similar to any other business: real estate, equipment, inventory, utilities, staff and more. However, franchisees also have to pay specific fees — such as franchise fees, royalty fees and advertising fees — to their parent company.
These fees cover costs for training, operating guidelines and marketing from the franchise headquarters.
Most banks offer financing for the purchase of a franchise, but may be more stringent on their terms and rates compared with other financing options. Banks are a good option if you have good personal credit and personal assets.
Yes, SBA 7(a) loans can be used for a range of purposes, including franchises, and SBA CDC/504 loans can be used for large fixed-asset purchases, such as long-term equipment and existing buildings or land for a franchise. You’ll typically need good credit, solid revenue and multiple years in business to obtain an SBA loan for franchise financing.
Generally, those best qualified for a franchise loan have excellent personal credit and assets, and little personal debt. You also want to make sure the business you are franchising has a good reputation. Experience as a business owner or in the field of the franchise is also a plus.
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms
- Flexible payment options
- Fast funding times
- Accessible customer service
- Reporting of payments to business credit bureaus
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.