Expanding Franchising's Reach Expanding Franchising's Reach

Franchise Lending 101
What you need to know when securing financing for your franchise development or equipment purchasing needs.
By Chris Owens
What types of loans are available?
32 MINORITIES IN FRANCHISING 2002
F O C U S F I N A N C I N G
SBA 7(a) Loan amounts: $75,000 - $1,500,000
Loan Term: 7-25 year amortization
Equity Requirement: 20-30 percent
Finding the right financing fit for
franchise projects is a challenge, but
perseverance and an understanding of
your choices can ensure the right program
for you. Understanding the types of loans
available as well as using a lender who is
experienced in franchise financing will help
you find the funds necessary to make your
franchise a reality. But first a few things you
need to know to make this complex process
a little easier to understand.
What are lenders looking for?
Specific ingredients reviewed by lenders
include: the right location, a choice market,
excellent management and an attractive
brand name. Lenders also want to know
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SBA 504 Loan amounts: Up to $4 million
Loan Term: 20 year maturity / 20 year amortization
Equity Requirement: 25 percent average (15 percent minimum of
eligible hard costs, plus working capital and inventory)
Conventional Loan amounts: TBD (depending on individual lender programs)
Loan Term: 20 year maturity / 20 year amortization
Equity Requirement: 25 percent – 30 percent minimum
Business & Loan amounts: Up to $10 million
Industry Loan Term: Up to 25 years
Equity Requirement: Starting at 20 percent
Supplemental Loan amounts: $50,000 to $10 million
Financing & Leasing Loan Term: Full amortization
Equity Requirement: 20 percent minimum