Most franchise purchases are financed one of two ways: an SBA 7(a) loan routed through an SBA-approved lender, or financing from a non-SBA commercial lender built specifically around franchise buyers. The SBA 7(a) typically offers the lowest rate and longest term available to a franchise buyer, but it comes with SBA eligibility review and a 45–90 day close. Franchise-specific financing skips the SBA layer — faster close, less paperwork — but usually at a higher rate and shorter term.
Quick answer: The SBA 7(a) loan is the most-used path to buy a franchise and usually wins on rate and term if your franchise brand is SBA-eligible; non-SBA franchise-specific financing wins when you need to close faster or your franchise concept doesn't fit SBA rules.
| Spec | SBA 7(a) Loan (Franchise Purchase) | Non-SBA Franchise-Specific Financing |
|---|---|---|
| Starting APR | 9.00%–11.50% | 9–20% APR |
| Rate range | 9.00%–11.50% | 9–20% APR |
| Down payment | 10–30% | 15–30% |
| Timeline | 45–90 days | 1–4 weeks |
◈ marks the stronger option for that row.
SBA-approved banks and preferred lenders
The most widely used financing path for buying a franchise — broad use of proceeds at the lowest available rate.
Pros
Franchise-finance lenders and franchisor-facilitated financing programs
Financing built around franchise buyers, without SBA eligibility review — faster close, fewer program rules.
Pros
Pick SBA 7(a) Loan (Franchise Purchase) if: Franchise buyers whose brand is listed on the SBA Franchise Directory and who can wait 45–90 days to close in exchange for the lowest rate and longest term.
Pick Non-SBA Franchise-Specific Financing if: Franchise buyers who need to close faster than the SBA timeline allows, or whose brand doesn't fit SBA franchise-eligibility rules.
Apply for SBA Franchise Financing →Apply for Franchise Financing →
The SBA 7(a) loan is the more widely used path and generally wins on rate and term if your franchise brand is listed on the SBA Franchise Directory and you can accommodate a 45–90 day close. Franchise-specific financing wins when speed matters more than rate, or when your franchise concept isn't SBA-eligible. Many buyers apply to both to compare actual offers. Source: sba.gov/funding-programs/loans.
The SBA Franchise Directory lists franchise brands whose franchise agreements the SBA has already reviewed for program eligibility. If your brand is on the directory, your SBA lender can move directly to underwriting your file. If it isn't, the lender must submit your franchise agreement for an individual SBA eligibility review, which adds time before underwriting can even begin. Source: sba.gov.
Most franchise financing — SBA or non-SBA — requires a 10–30% equity injection from the buyer, with the exact figure set by the lender's underwriting on your specific file and franchise concept. SBA loans require a minimum 10% injection for most for-profit small business loans; many franchise buyers put down more depending on the brand's initial investment range and the lender's risk assessment. Source: sba.gov.
Yes — the SBA 7(a) can finance the purchase of an existing franchise location (a resale) as a business acquisition, not just a new-unit opening. The lender will underwrite the acquisition using the location's historical financials in addition to the standard franchise eligibility review. Source: sba.gov.
Some franchisors maintain relationships with third-party franchise-finance lenders or facilitate introductions to lenders familiar with their brand and initial investment structure, which can streamline underwriting. Franchisors generally do not originate the loan themselves — they refer buyers to their preferred lending relationships. Confirm what financing support (if any) a specific franchisor offers directly with that franchisor's development team.
SBA-approved lenders typically look for a personal FICO of 650+ for a franchise 7(a) loan, alongside relevant management or industry experience and sufficient liquidity for the down payment — see the full SBA loan requirements breakdown for the complete eligibility picture. Non-SBA franchise-finance lenders set their own bars, which can run similarly or somewhat more flexibly depending on the lender and the strength of the franchise brand's unit economics. Every franchise loan also carries a personal guarantee from owners with 20%+ equity. Source: Federal Reserve Small Business Credit Survey at fedsmallbusiness.org.
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