How do I get a franchise loan?

You can get a franchise loan with a 640+ FICO score, 24 months in business, and $100K+ annual revenue. SBA 7a loans offer the lowest rates.

Check your franchise loan rate in 2 minutes — no credit-score impact.

The specifics

Franchise loans come in several forms, each with different qualification thresholds and use cases. The most affordable option is the SBA 7(a) loan, which as of 2026 carries rates of Prime + 2.75–4.75% APR according to the SBA. To qualify, you need a minimum 640 FICO score, at least 24 months in business, and $100K or more in annual revenue. Loan amounts range from $50K to $5M+ with terms of 10–25 years. Processing takes 30–90 days.

Business term loans are the backup when you need speed over the lowest rate. According to NerdWallet's 2026 lending data, these loans require 600+ credit, 12 months in business, and $100K+ revenue. Rates run high single digits to low teens for strong credit, with funding in 2–5 days. Amounts reach $25K to $1M+ over 1–5 years.

Working capital loans target short-term needs like inventory or payroll. Per our partner terms, these require just 550 credit, 6 months in business, and $10K monthly revenue. Factor rates of 1.15–1.40 translate to roughly 25–60% APR, but funding happens within 24 hours.

Qualification & edge cases

Your debt service coverage ratio (DSCR) matters as much as credit. Most lenders want your monthly loan payment to stay under 12% of gross monthly revenue. If you carry existing debt, that shrinks your borrowing capacity. Divide your target payment by monthly revenue — if the result exceeds 0.12, you need to reduce the loan amount or improve revenue first.

If your credit score falls below 640, you're not automatically disqualified. Business term loans accept scores as low as 600 with 12 months in business. For first-time franchise buyers without a long track record, a franchisor approval letter can strengthen your application significantly. Some lenders also offer non-SBA franchise funding designed for borrowers who don't fit SBA boxes.

Newer businesses (under 12 months) should consider equipment financing, which requires just 580 credit and 6 months in business. This is ideal if your franchise requires specialized equipment — you can finance trucks, kitchen gear, or machinery separately from the main acquisition.

Background & how it works

Franchise financing exists because franchise businesses have predictable revenue streams and established operating models that lenders can evaluate. Unlike generic small business loans, franchise lenders often have approval lists from the franchisor itself, which can streamline underwriting. According to Bridge Marketplace's 2026 rankings, the best franchise financing companies include Live Oak Bank, Clarify Capital, and BoeFly, each specializing in different franchise types and loan sizes.

The process starts with pre-qualification — a soft credit pull that reveals rates and terms you likely qualify for. Once you select a product, the lender requests tax returns, bank statements, your franchise agreement (or FDD), and proof of collateral. For SBA loans, the lender submits your package to the SBA for guarantee approval, which adds 2–4 weeks to the timeline.

Bottom line

You can get a franchise loan by meeting simple thresholds: 640+ credit, 24 months in business, and $100K+ revenue. SBA 7a loans give you the lowest cost; business term loans give you speed. Check your rate now to see which option fits your timeline and capital needs.

Disclosures

This content is for educational purposes only and is not financial advice. franchiseeloan.com may receive compensation from partner lenders, which may influence which products are featured. Rates, terms, and availability vary by lender and applicant qualifications.

Sources

• SBA 7(a) Loan Program
• NerdWallet: Best Franchise Financing Loans 2026
• Bridge Marketplace: Best Franchise Financing Companies 2026
• Franchises Finance: Non-SBA Franchise Funding