Best Franchise Loans in December 2025
Compare top lenders to find funding for your franchise.
| Lender | Starting rate | Amount | Term | Time in business | |
|---|---|---|---|---|---|
|
4.66% (suffix) |
$1k – $1.5M |
Not specified | 3 months | |
|
31.30% (suffix) |
$5k – $250k |
18 – 24 months | 12 months | |
|
22.45% (suffix) |
$25k – $500k |
6 – 60 months | 24 months |
Franchise loan lenders at a glance
Best for: New franchises – Fundbox
- Starting rate
- 4.66%
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- Short time in business requirement
- Next-day funding available
- Flexible eligibility requirements
- Low funding amounts compared to other lenders
- Short repayment terms
- Doesn’t list full range of interest rates
If you’re looking for franchise startup loans, Fundbox’s line of credit could be a good fit. While other lenders typically require a one- to two-year business history, Fundbox works with early-stage startups after just three months of operation.
You can apply online and get a decision in minutes — with funds hitting your business bank account as soon as the next day.
Note that Fundbox’s loan amounts and repayment terms are limited compared to other lenders. In addition, its lowest interest rates are typically reserved for high-credit borrowers, with no details on Fundbox’s maximum rates.
In order to qualify, you’ll need to meet Fundbox’s criteria of:
- Minimum credit score: 600
- Minimum time in business: 3 months
- Minimum annual revenue:
Best for: Online term loan – OnDeck
- Starting rate
- 31.30%
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- Large borrowing amounts
- Fair to low credit accepted
- On-time payments help build business credit
- High interest rates
- Does not lend to businesses in North Dakota
- Requires daily or weekly repayments
OnDeck can be a great choice for franchise owners wanting a business term loan with flexible eligibility requirements and minimal paperwork — all accessible online. You can borrow up to $250,000 to cover inventory, equipment or expansions, with no penalty for repaying your debt early.
Since OnDeck reports to the major business credit bureaus, on-time payments can help establish and strengthen your business credit profile.
In order to qualify, you’ll need to meet OnDeck’s criteria of:
- Minimum credit score:
- Minimum time in business: 12 months
- Minimum annual revenue:
Best for: Established franchises – iBusiness Funding
- Starting rate
- 22.45%
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- Fast funding
- Transparent requirements
- No prepayment penalties
- Charges origination fees
- Collateral and personal guarantee required
- Not ideal for startups
Previously known as Funding Circle, iBusiness Funding is ideal for established companies with reliable revenue and solid credit. If eligible, you can access up to $500,000 for your franchise’s working capital expenses or to refinance business debt. With a quick and easy online application, funds could be delivered as quickly as two business days.
Note that origination fees can range from 4.49% – 10.49%, with APRs as high as 15.75%. You will also need to provide collateral and a personal guarantee, although there are no penalties for repaying your loan ahead of schedule.
In order to qualify, you’ll need to meet iBusiness Funding’s criteria of:
- Minimum credit score: 640
- Minimum time in business: 24 months
- Minimum annual revenue:
What is a franchise loan?
A franchise loan is a form of business financing that helps entrepreneurs launch a franchise. The loan typically covers franchise fees and other startup costs associated with opening a franchise.
Although franchise financing can make the high cost of buying a franchise more manageable, many lenders require applicants to have a specific amount of liquid assets. Companies may also have personal net-worth requirements for applicants.
How much franchise financing do I need?
The cost to start a franchise business can vary from $20,000 or less to over $1 million. How much you need depends on your franchise’s industry, estimated overhead expenses and goals for growth and expansion. Creating a business budget can help determine a ballpark figure.
But you can’t borrow 100% of what you need. Most franchisors require you to have a minimum amount of cash on hand before you get started.
For example, Pet Supplies Plus requires franchise applicants to have $600,000 in total net worth, including $300,000 in liquid assets. McDonald’s is equally strict, requiring $500,000 of non-borrowed personal resources to be considered for a franchise.
Franchise financing options
Franchisor financing
- Pros: Typically requires less paperwork and delivers funds faster.
- Cons: May not offer the best rates or may set restrictions on how to spend the funds.
Often, branded-businesses like popular restaurants, stores, gas stations, plumbing and cleaning services and other companies may offer their own financing to franchise applicants. Even if the parent companies don’t offer direct financing to franchisees, they often partner with specific lenders to grant loans to applicants.
If you have a specific franchise in mind, research the company’s website to see what loan options are available. At the same time, it’s worth contacting your local bank or an alternative lender to see if they can offer you a better deal.
SBA
- Pros: Offers a partial guarantee from the federal government and capped interest rates.
- Cons: You generally need good credit, a solid business plan and multiple years in business to qualify.
SBA 7(a) loans
As the most popular option in the SBA loan program, the SBA 7(a) loan provides up to $5 million to use for general franchise expenses like purchase fees, inventory, payroll, equipment, real estate and more. While the government guarantees a portion of the funds, you must apply directly with an SBA-approved lender.
Repayment terms go up to 10 years for general expenses, or up to 25 years for real estate purchases. Interest rates can be fixed and variable but are capped based on SBA standards. You may need to provide collateral for loans over $50,000.
SBA 504 loans
The SBA 504 loan also provides up to $5 million, although eligible energy-related projects may qualify for $5.5 million. Funds are typically used for fixed assets, such as purchasing commercial property, buildings or machinery. The lender typically provides around 50% of the loan, while a Certified Development Company (CDC) covers 40%, leaving you to contribute the remaining 10% (or 20% in some instances).
Repayment terms range from 10 to 25 years. The SBA sets interest rates, which are usually 3.00% of the total loan amount. Keep in mind that the 504 loan program requires you to create or retain a minimum of one job opportunity per every $90,000 the SBA guarantees.
Banks
- Pros: Low interest rates, flexible repayment terms and higher loan amounts.
- Cons: Strict eligibility criteria and revenue requirements can make it hard for startups or bad credit borrowers to qualify.
Bank business loans and credit unions business loans are other options worth considering for your franchise. Depending on your credit score and liquid funds, you may qualify for financing with your current bank.
While these loans often have low interest rates and favorable repayment terms, business loan requirements can be strict. You’ll likely need an excellent credit score and solid revenue to qualify. Be prepared to present a comprehensive business plan and pledge collateral, as well.
Online lenders
- Pros: Fast funding times and more lenient eligibility requirements.
- Cons: Usually charges higher interest rates with less flexible repayment terms.
Online lenders, also called alternative lenders, typically fund loans within one to three business days. In comparison, traditional bank and SBA lenders can take anywhere from two weeks to three months to process and fund your loan.
While eligibility criteria will vary by lender and loan type, alternative lenders typically have more lenient requirements when it comes to minimum credit scores, business history and collateral.
That said, you can expect higher business loan interest rates and shorter repayment terms when using an online lender.
ROBS
- Pros: Use your current retirement savings to purchase stock and fund your franchise expenses, all tax free.
- Cons: You risk losing a chunk of your retirement savings, especially if the business fails.
You can also fund your franchise using ROBS, Rollover as a Business Startup. This is a tax-free option where you roll over money from an existing retirement account to a new 401(k) plan attached to your C corporation. Your business entity must be set up as a C-corp to allow you to purchase private stock. (If your business entity isn’t already set up this way, you can incorporate in seven easy steps.)
As your stock equity grows, you can use the profits to purchase a franchise, cover ongoing business expenses or as a down payment for an SBA loan.
Hiring a third-party ROBS provider can help ensure you take all the right steps to avoid taxes or penalties. Once set up, you’ll need to file IRS Form 5500 annually, which outlines your plan’s assets.
You’ll also need to file corporate business taxes to avoid penalties from the IRS.
Lastly, make sure you follow your state’s specific laws regarding ROBS, which can be found on your state’s Secretary of State website.
How to get a franchise loan
Figuring out how to get a business loan for your franchise might feel overwhelming. Here are five steps to help guide you through the process.
1. Research the franchise
If you know which franchise you’d like to start, research the company to understand the franchise fee and general startup costs. Network with other franchisees who’ve successfully opened a franchise under that parent company to learn how they secured funding.
At this point, you can also determine if the franchise:
- Offers its own direct financing (or partners with specific lenders to offer financing)
- Is already registered with the SBA, which could increase your chances of qualifying for an SBA loan
Pro Tip: If you are open to many franchise options, specifically research franchises with lower franchise fees and startup costs. This can improve your chances of getting funding.
2. Review your finances+
Once you know which franchise you’d like to open, review your personal finances to see where you stand. You may want to work with an accountant to get a handle on your net worth, liquid funds and credit score. You could also work on boosting your credit score to improve your chances of securing a competitive loan offer.
3. Research financing options
Start with the franchise to see if you qualify for their in-house financing, if offered. You can also consider SBA loans as well as franchise financing through banks, credit unions and online lenders so you have a clear picture of what’s available to you.
4. Assemble a business plan
If you meet the general requirements for approval, build a business plan that demonstrates how you’ll turn a profit and why you’re the right person for the job. Check to see if your preferred lender has specific guidelines for crafting a business plan.
You’ll need a lot of business know-how to launch a franchise, so this is good practice. But if this part of the process is overwhelming, consult with a marketing professional, business consultant or SCORE Business Mentor to help strengthen your business plan.
5. Apply with a lender
Take time to research potential lenders to find one that best fits your needs. Specific requirements will vary by lender and loan type, but you can expect to provide the following documents:
- Your detailed business plan
- Recent tax returns (for you and your business, if applicable)
- Recent bank statements (for you and your business, if applicable)
- Franchise agreement
What to look for in a franchise loan
When looking for a franchise loan, prioritize options with the lowest rates and fees — but also, be realistic about what you can qualify for. Loans with the best interest rates and lowest fees are the hardest to get, so carefully consider a lender’s requirements for time in business, credit score, net worth and access to liquid funds. Also factor in the approval and funding timeline, especially if you want to move fast.
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Time in business requirement
Some lenders expect you to have a minimum number of years in business, although some lenders work with startups. -
Rates and fees
Like with any loan, expect to pay upfront fees and ongoing interest rates. The best franchise loans will have low fees and interest rates, but are only available to the most qualified borrowers. -
Credit and financial requirements
Many lenders have minimum credit score requirements and often expect applicants to have a minimum net worth and/or amount of liquid funds. -
Approval timeline
Online lenders often offer the fastest approval and funding process, but you may get better rates and a higher loan amount if you go with the SBA or a traditional lender — just expect the process to take longer.
Not sure how much you can borrow? Use our business loan calculator to estimate how much you might qualify for.
Frequently asked questions
Starting a franchise with no money is challenging, but not impossible. Research franchises with small fees — like those less than $20,000. Check to see what loan options you can get directly from the franchise company, but also consider loans from banks and SBA lenders. If you can’t meet the criteria for traditional financing, you could consider an online lender or a bad credit business loan.
Yes, banks and credit unions do give loans to franchisees. Research the financial institution of your choice to understand their business loan requirements before you apply.
To get a franchise loan, you need to be a successful entrepreneur with a good to excellent credit score, healthy finances that include liquid assets, a detailed business plan and a positive net worth.
While each lender has its own requirements, you’re more likely to get approved and secure a competitive rate if you have a decent amount of capital to invest in the franchise. And having a proven track record of turning profits can help seal the deal.
Our methodology: How we chose the best franchise loans
We reviewed 20 top franchise lenders to determine the overall best seven franchise loans. To make our list, lenders must meet the following criteria:
- Flexible time in business requirements: We chose lenders with a range of time in business requirements to assist business owners at different stages, including brand-new startups to more established companies.
- Rates and terms: We prioritized lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Loan amounts: We considered a range of loan amounts to fit various franchise needs, such as lower amounts to cover working capital expenses and more significant funds to cover commercial real estate or equipment.
- Repayment experience: For starters, we considered each lender’s reputation and business practices. We also favored lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.