Franchise business loans for the whole cost of opening, not just the fee
The franchise fee is the smallest part of what you will spend. Buildout, equipment, opening inventory and the working capital to survive the first months are the rest — and lenders look at all of it together.
No hard credit pull to see your options
Not sure which financing fits?
Speed varies by product. Working capital and lines of credit can fund within a day; SBA loans take 30–90 days.
What you are actually financing
Almost every first-time franchisee underestimates the total, because the franchise fee is the number in the brochure and the smallest line in the budget. Lenders finance the whole opening, and they expect you to have costed it the same way.
- The franchise fee. A one-off payment for the right to operate the brand. Real, but usually a fraction of the total investment.
- Buildout and leasehold improvements. Usually the largest single line for a bricks-and-mortar unit, and the one most likely to run over.
- Equipment and signage. Frequently specified by the franchisor, which limits how much you can economise.
- Opening inventory and supplies. Bought before a single customer arrives.
- Working capital for the ramp. The months between opening and reaching steady trade. Under-funding this line is the most common way a viable franchise fails.
- Ongoing royalties and marketing fees. Not financed, but they change the cash flow the lender is underwriting.
You do not have to estimate these figures yourself. Under the FTC’s Franchise Rule, a franchisor must give you a Franchise Disclosure Document, and Item 7 of that document sets out the estimated initial investment as a range, broken into categories, including how much working capital the franchisor expects you to need for the initial period.
Item 7 is the single most useful page in franchise financing. Bring it to any lending conversation — a funding request that matches the franchisor’s own published range is far easier to underwrite than one that does not.
SBA franchise loans and the Franchise Directory
SBA lending and franchising fit together unusually well, because a franchise brings something a startup normally cannot: an established operating model with a track record the lender can look at. But there is an eligibility mechanism specific to franchises, and it has changed twice in recent years.
The SBA Franchise Directory
The Directory is a list of brands SBA has reviewed for eligibility, so lenders do not each have to analyse the franchise agreement for affiliation and control. If your brand is listed, that part of the process is largely settled.
It is current: the version in force at the time of writing took effect on 20 August 2026.
It was withdrawn, then brought back
SBA stopped maintaining the Directory in 2023, shifting the eligibility review onto lenders. It was reinstated with effect from 1 June 2025 alongside SOP 50 10 8.
A good deal of franchise financing advice online still describes the gap period. Check the current Directory rather than an article.
Two practical consequences. First, ask the franchisor directly whether the brand is currently listed — established franchisors know their status and will tell you. Second, if it is not listed, SBA financing is not automatically closed to you, but the lender has more eligibility work to do and the timeline lengthens.
Directory status verified against the U.S. Small Business Administration’s published SBA Franchise Directory, effective 20 August 2026 (page last updated 21 August 2026), checked 2 September 2026. Eligibility rules sit in SBA SOP 50 10. Fundur is not the SBA and is not a government agency; SBA does not lend directly to borrowers.
Franchise loans are fewer, and much larger
Franchised businesses are a minority of SBA 7(a) borrowers but take a disproportionate share of the money. The gap between those two shares is the most useful thing in the dataset for anyone planning a franchise purchase.
| SBA 7(a), FY2020–FY2025 | Franchised | Non-franchised |
|---|---|---|
| Loans approved | 36,689 (12.1%) | 265,795 (87.9%) |
| Share of dollars approved | 18.2% | 81.8% |
| Median loan size | $362,000 | $150,000 |
| Median term | 120 months | — |
| Distinct brands financed | 3,207 | — |
The median franchise loan is roughly two and a half times the median non-franchise loan. That is the buildout, equipment and working capital being financed together as one opening — and it is a useful reality check against a franchise fee quoted on its own.
| Sectors receiving the most franchise 7(a) loans | Loans |
|---|---|
| Limited-service restaurants | 4,753 |
| Hotels and motels (except casino hotels) | 3,010 |
| Fitness and recreational sports centres | 2,736 |
| Snack and non-alcoholic beverage bars | 1,992 |
| Gasoline stations with convenience stores | 1,615 |
| Full-service restaurants | 1,500 |
Food service and fitness dominate, which tells you where the lending experience is deepest. If you are buying into one of these categories, lenders have seen your model many times — and if you are not, expect more questions about the unit economics.
Source: U.S. Small Business Administration, 7(a) FOIA data file FOIA_7a_FY2020_Present_asof_260630.csv, as-of 30 June 2026 (accessed 2 September 2026). Population: 7(a) approvals FY2020–FY2025, excluding cancelled approvals and exact duplicate records; “franchised” means a franchise name was recorded on the approval. Approvals are not originations, and a loan being approved does not mean it was disbursed. Historical data describes past lending, not current availability or terms.
Opening a new unit versus buying an existing one
These are underwritten quite differently, and knowing which one you are doing changes what you should be preparing.
A new unit is a construction and ramp-up story
There is no trading history for this location, so the lender leans on the brand’s track record, your own experience and money, and the franchisor’s Item 7 estimates. Working capital for the ramp carries a lot of weight.
A realistic buildout budget with contingency, and enough working capital in the request to cover the period before the unit trades normally.
A resale is a business acquisition
You are buying an operating unit with real numbers. The lender can look at actual revenue and cash flow, which usually makes underwriting more straightforward — but the purchase price now needs to be justified.
Clean financials from the seller, a defensible valuation, and franchisor approval of the transfer — which is required and can take time.
Adding a unit to an existing franchise business
Multi-unit operators are underwritten on their existing portfolio. This is generally the easiest franchise financing to arrange, because there is a demonstrated record of running the brand profitably.
The performance of the units you already run, and the debt already carried across them.
In all three cases the franchisor is a participant, not a bystander. Transfer approval, site approval and build specifications are theirs. Some franchisors also run their own financing or fee-deferral programmes for new franchisees — worth asking about before you assume outside funding is the only route.
Which financing is right for your situation?
A franchise opening usually needs more than one instrument. These are the situations franchisees describe.
“I am funding a full opening — fee, buildout and working capital — and I can wait for the right terms.”
SBA Loans
Government-guaranteed lending with long repayment terms, well suited to a whole-project franchise request.
Explore SBA loans“The franchisor has specified the equipment package and I would rather not pay cash for it.”
Equipment Financing
Spreads the cost of specified equipment over its working life, secured on the equipment itself.
Explore equipment financing“I need one lump sum on a predictable schedule for a defined project.”
Business Term Loan
A single amount repaid on a fixed schedule — the simplest shape for a costed opening.
Explore term loans“The unit is open but trade is uneven while we build the customer base.”
Business Line of Credit
Reusable capacity for an uneven ramp, drawn only in the weeks it is needed.
Explore a line of credit“Royalties, payroll and rent all landed before the season picked up.”
Working Capital Loan
A lump sum sized to everyday operating cost when the pressure is general rather than a purchase.
Explore working capital loans“My franchise is B2B and my clients pay on 30- to 60-day terms.”
Invoice Factoring
Turns approved B2B invoices into cash now — relevant for commercial service franchises, not consumer-facing units.
Explore invoice factoringMany franchise categories have their own financing patterns. See restaurant financing, gas station financing, or browse financing by industry.
Franchise business loan FAQs
Can I get an SBA loan for a franchise?
Yes — franchises are a well-established category of SBA 7(a) borrowing. Between FY2020 and FY2025 franchised businesses accounted for about 12% of 7(a) approvals and 18% of the dollars. The brand’s status on the SBA Franchise Directory affects how the eligibility review is handled.
What is the SBA Franchise Directory and does my brand need to be on it?
It is SBA’s list of brands reviewed for eligibility, which spares lenders from analysing each franchise agreement themselves. Being listed makes the process smoother. Not being listed does not automatically disqualify you, but it adds eligibility work and time. The Directory was withdrawn in 2023 and reinstated with effect from 1 June 2025, so older advice about it is often out of date.
How much of the total cost do I need to put in myself?
Lenders expect meaningful equity from the borrower, and the proportion varies by lender, by brand and by whether you are opening new or buying an existing unit. There is no single published figure that applies across the market. What is consistent is that more equity widens your options and improves the terms.
What is Item 7 and why does it keep coming up?
Item 7 of the Franchise Disclosure Document is the franchisor’s own estimate of your initial investment, broken into categories and expressed as a range, including expected working capital for the opening period. Lenders use it as a benchmark, so a request that matches it is easier to underwrite than one that does not.
Is it easier to buy an existing franchise than open a new one?
Underwriting is usually more straightforward for a resale, because there are real trading figures rather than projections. The trade-off is that you must justify the purchase price, and the franchisor has to approve the transfer, which takes time.
Can I finance the franchise fee itself?
The fee is normally treated as one line within the total project cost rather than financed on its own. Lenders look at the whole opening — fee, buildout, equipment and working capital — because that is what determines whether the unit can service the debt.
Does a franchise make approval easier than an independent startup?
It removes one large unknown: the operating model has a track record, which an independent startup does not. That helps. It does not remove the need for equity, credit and a credible plan for this particular location.
How does Fundur help?
One application is compared across the options available for your project, with the differences explained. Fundur is a financing marketplace, not a lender, and is not affiliated with the SBA or any franchisor. Checking your options is a soft inquiry and will not affect your credit score.
Tell us about the franchise. We will find the financing that fits.
Bring your Item 7 range and we will compare the routes to funding the whole opening — not just the fee.
Fundur is a financing marketplace, not a lender. Fundur does not make credit decisions or guarantee approval, rates, terms, or funding times. A dedicated funding advisor can walk you through any option you receive. Final terms depend on lender approval.