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Franchise Financing: Best Business Loan Options

Running a franchise involves handling staff, customer service, keeping track of cash flow, and operations, while paying franchise fees. This multitasking, especially for newcomers, can make it harder to profit. Securing the right financing to start and grow your franchise adds another complexity.

Franchise Financing Options
Paige Cerulli
Written by:Paige Cerulli
Business Content Writer

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Best Overall
Lendzi logo

Lendzi - Best Chances for Getting Approved

Min. Annual Revenue
Min. Time in Business
6 months
Min. Credit Score
Key Features
  • Borrow up to $400,000
  • Competitive starting rates on most products
  • Bad credit accepted
  • See your options without hurting your credit
  • Flexible terms: 3 to 15 months
  • Excellent customer reviews on independent review sites
Pros & Cons
  • Easy, online application
  • Fast funding times: Within 24 hours for some borrowers
  • Bad credit accepted: Minimum score is 500
  • Multiple loan options: Choose from seven different types of loan
  • Competitive rates: Starting at 3.49%
  • Rates can be high for those with poor credit
  • High annual revenue requirement: $180,000

Lendzi was founded in 2020 with a goal of supporting businesses who struggle to get a loan. They are a direct lender and a lending marketplace, meaning the odds of getting approved are in your favor.


Main Features

Lendzi offers seven different types of financing for your franchise: short- and long-term business loans, business lines of credit, working capital loans, merchant cash advances, equipment financing, and SBA loans. Some cap out at $400,000, whereas others go up to $2 million. Rates are competitive and are mostly based on your credit score. The higher your score, the better the rate you’ll receive.

To qualify, you need to be in business at least six months and have $180,000 or more in annual revenue. One of the best features of Lendzi is their excellent customer service. A representative calls you once you apply to review your business and loan options with you. This allows you to ask any questions and not feel so alone in the process. Lendzi is definitely doing something right, as they currently have more than 2,000 5-star reviews on sites like Google, TrustPilot, and Better Business Bureau.

Lendzi is one of our top picks for online lenders because they truly care about meeting the needs of you, the borrower. They cater to franchises with poor credit scores, those who have been denied a loan elsewhere, those who need just a small loan to get them through a rough patch, and those that need a large loan to fund a renovation. Whatever your business needs are, Lendzi can help meet them.

National Funding - Best For Equipment Loans

Min. Annual Revenue
Min. Time in Business
6 months
Min. Credit Score
Key Features
  • Borrow up to $500,000
  • Fast funding
  • Early payment discounts
  • Loan Repayment 2-5 years
  • Factor rate From 1.10
Pros & Cons
  • Fast funding: Depending on when you apply, you may collect your funds via direct deposit within 24 hours.
  • Solid reputation: National Funding has served business owners for over 20 years and funded over $4.5 billion for all types of businesses, including franchises.
  • Excellent support: If you need assistance with your loan, you can reach out to National Funding via phone or email and speak to a dedicated loan officer once you’re approved.
  • High annual revenue requirement: National Funding only lends to businesses who earn at least $250,000 per year so it can be a challenge to get approved if you’re just starting your franchise.
  • Expensive rates and fees: Compared to loans from other lenders, National Funding equipment loans feature higher rates and fees.
  • No mobile app: Unlike other lenders, National Funding doesn’t offer a mobile app you can use to keep tabs on your loan while you’re out and about.

National Funding offers equipment loans that go up to $150,000. Upon approval, you can use the funds to pay for the new or used equipment you need to run your franchise. Fortunately, there is no down payment required and you can prequalify without any impact to your credit score.


Main Features


National Funding’s equipment loans go up to $150,000 with repayment terms between two and five years. The pay rate starts at 1.10 and you’ll repay what you borrow every month. To be eligible for an equipment loan, you’ll need a credit score of at least 600, at least two years of business history, and $250,000 or more in annual revenue. 

If you’re looking for a way to pay for your franchise equipment, an equipment loan from National Funding can be a good option. As long as you earn at least $250,000 in revenue, you can get approved for up to $150,000 without a down payment.

SmartBiz - Best for Creative Financing Solutions

Min. Annual Revenue
Not disclosed
Min. Time in Business
2 years
Min. Credit Score
Key Features
  • SBA 7(a) loans up to $350,000
  • SBA commercial real estate loans up to $5 million.
  • Loan Repayment 10 - 25 years
  • SBA 7(a) loan rates: 8.25-9.25%
  • SBA Commercial real estate loan rates: 5.50-6.75%
  • Receive multiple loan offers
Pros & Cons
  • 5-minute prequalification application
  • Creative financing solutions
  • Repayment terms up to 5 years
  • Must be in business for 2+ years
  • Strict applicant requirements

SmartBiz offers bank term loans and custom financing options for franchise owners ranging from $30,000 to $500,000. The bank term loans feature repayment terms of two to five years, which gives borrowers a longer-than-average time to repay the loan. The custom financing options include a business line of credit, invoice financing, and business credit cards. The line of credit allows franchise owners to pay back and draw down funding repeatedly. Invoice financing can be an appealing option, since it lets franchise owners sell outstanding invoices to a lender. The franchise then receives part of the invoice payments that the lender collects.


Main Features

Applying for financing with SmartBiz is easy, thanks to the five-minute prequalification process that can save applicants time. SmartBiz has strict applicant eligibility requirements, including having been in business for at least two years, having the cash flow to support loan payments, and having a credit score of 660 or higher.

With options like invoice financing and business credit cards, SmartBiz moves past traditional funding and offers franchise owners greater flexibility. The five-minute prequalification application is convenient, and with upper limits of $50,000, SmartBiz funding is a practical choice for applicants who need smaller amounts of financing.
biz2credit review

Biz2Credit - Best for a Fast and Simple Application

Min. Annual Revenue
Min. Time in Business
18 months
Min. Credit Score
Key Features
  • Borrow up to $2 million
  • Loan Repayment 12-36 months terms
  • Variable APR depending on the applicant
  • Multiple loan types available
  • Funding in 72 hours
  • Soft credit pull
Pros & Cons
  • Flexible terms: 12 to 36 months
  • Funding up to $500,000
  • Fast, simple application: Takes 4 minutes
  • Get approved in 24 hours
  • Funding 72 hours after applying
  • High interest rates: Start at 7.99%
  • Requires credit score of 660+

Biz2Credit offers term loans that franchise owners can use to build their businesses. Loan amounts range from $25,000 to $500,000. You can use the loan for your operational needs, including making equipment purchases or payroll. The loan can help to free up cash flow, and once funded, you’ll have access to the full cash amount upfront, which is ideal when you need the funding to make a large purchase.


Main Features


Most applicants have a credit score of at least 660, have been in business for at least 18 months, and have an annual revenue of more than $250,000. Applying for a term loan with Biz2Credit takes just four minutes, and you can get approved within 24 hours. You may have funding as soon as 72 hours after submitting your application. Interest rates start at 7.99%, and repayment terms range from 12 to 36 months.

With a four-minute application and approval within 24 hours, this term loan is a practical choice for busy franchise owners who need funding quickly. Longer repayment terms of up to 36 months mean the loan will work for many business owners, and you can use the loan for many different purposes.

Bluevine - Best for Low Interest Rates

Min. Annual Revenue
Min. Time in Business
6 months
Min. Credit Score
Key Features
  • Funding up to $250,000
  • Interest rates as low as 4.8%
  • Loan Repayment 6-12 months terms
  • Quick and simple application
Pros & Cons
  • Replenishing credit line: For ongoing funding
  • No opening, maintenance, or prepayment fees
  • Up to $250,000 in funding
  • Low 4.8% interest
  • Fast approval: In as little as five minutes
  • Must have $10,000+ per month in revenue
  • Short terms: 6 or 12 months

BlueVine offers a business line of credit that franchise owners can repeatedly draw from. Credit lines are available up to $250,000, and as owners repay their line of credit, the credit line replenishes, creating a continuous funding line. With interest rates as low as 4.8%, this line of credit could be a good choice for franchise owners who are facing ongoing financing needs, such as during renovations, financing restaurant equipment (for example),  or when navigating cash flow challenges. Franchise owners will only pay for the funding that they use, and the line of credit has no opening, maintenance, or prepayment fees.


Main Features


To qualify, applicants need to have a FICO score of at least 600. They also need to have been in business for at least six months, and should have at least $10,000 per month in revenue. The application requires basic business information, and you can be approved in just five minutes. Once approved, you can request funds through the online dashboard, and they can be deposited within hours. You can pay back each draw over a six- or 12-month term.

BlueVine offers the flexibility of a business line of credit with interest rates starting at a low 4.8%. Since there are no opening, maintenance, or prepayment fees, this line of credit can be a lower-cost option for franchise owners who need flexible, ongoing financing that they can repeatedly draw down.
Torro review

Torro - Best for Fast Funding

Min. Annual Revenue
Not disclosed
Min. Time in Business
Not disclosed
Min. Credit Score
Not disclosed
Key Features
  • Borrow up to $575,000
  • Loan Repayment 12 - 48 months terms
  • Hundreds of financing options
  • Use the loan for any purpose
  • Fast process
Pros & Cons
  • Fixed term and open ended options
  • Easy application
  • No prepayment penalty: For fixed term loans
  • Funding up to $575,000: For fixed term loans
  • No qualification criteria disclosed
  • No information on interest rates

Torro offers both fixed term and open ended funding for franchise owners. The fixed term funding features a maximum limit of $575,000, and there is no prepayment penalty. Payments are divided evenly across a term of three to 24 months. The open ended funding features a maximum limit of $125,000, but franchise owners can draw just what they need at one time. They can return and draw more money down in the future, and as they pacy back their loans, their monthly payment size declines.


Main Features


Torro has a simple online application that can be completed through a computer or even a smartphone. The application requires some personal and business information, and Torro advertises a fast approval. In many cases, you can get funding the same day that you’re approved, making Torro a good option for franchise owners who are in a hurry to move forward with their financing.

By offering both fixed and open ended funding, Torro can help many franchise owners to address their financing needs. Its simple application and the ability to get funding the same day you’re approved is a major advantage, especially for franchise owners who need financing quickly.
Fundbox review

Fundbox - Best for Fast Repayment

Min. Annual Revenue
Min. Time in Business
6 months
Min. Credit Score
Key Features
  • Borrow up to $150,000
  • Loan repayment 6-12 months terms
  • Interest rate 4.66% minimum
  • No monthly fees or prepayment penalties
  • Same-day or next-day funding
  • Best for business lines of credit
Pros & Cons
  • Two possible financing options
  • Simple, fast application takes minutes
  • No origination fees or prepayment penalties
  • No information on interest rates
  • Short repayment terms

Fundbox offers a term loan and a line of credit that can be used for franchise financing. With the term loan, you’ll receive a lump sum that’s suitable for one-time expenses like an equipment purchase. The term loan can also be a suitable choice if you know how much funding you will need. Fundbox offers eligible applicants the ability to take an additional term loan without reapplying. If you need more flexibility, the line of credit offers ongoing funding that you can draw down, repay, and then draw down again. It can be a good choice for ongoing funding


Main Features


Applying for the term loan or line of credit is a relatively simple process. Fundbox requires basic business information, and you’ll need to connect your accounting software or business checking account. The term loan is available with a 24- or 52- week repayment term, and payments are structured to stay the same through the entire term, avoiding unexpectedly larger payments. To apply for a line of credit, you will need a credit score of at least 600. You’ll also need to be generating $100,000 or more annually, and will need to have been in business for at least six months. You can choose a 12- or 24-week repayment term.

With both a term loan and a line of credit, Fundbox offers financing solutions for a franchise owner’s short- and longer-term funding needs. Applying for either option is simple and quick. While the repayment terms are short, there are no origination fees or prepayment penalties to worry about.

In this review, we highlight the terms, rates and fees of each franchise financing company, and explain what makes it a good choice. We also share potential downsides of each company, and provide a rating methodology you can use to select the best equipment financing option for your needs.

Franchises can carry significant start-up costs, and owners may need to invest in a property purchase or lease. Even once the franchise is operating, paying for equipment purchases, expansion costs, and taxes can add up, especially when the business goes through periods of low cash flow. Many alternative small business lenders offer franchise financing to help you navigate these challenges. Our team of financial experts reviewed and ranked the top online lenders to help you get funded.


How to Choose the Best Franchise Financing Option

It’s important to choose franchise financing that’s right for you and your business. When evaluating funding options, it’s helpful to weigh several factors so you can understand the pros and cons of each option.

  • Loan Features: Consider the specific features of the loan, including the terms, repayment optionality, and the funding amounts available. Make sure that you’ll be comfortable paying back the loan within the specified terms.
  • Application process: How invasive are the application requirements, and how much time will you spend applying? Look into whether the application has a hard-pull or soft-pull credit score impact. If you’re in a hurry for franchise funding, consider how quickly applications are approved and loans are funded.
  • Interest rates and fees: Consider different types of fees, like origination fees, as well as the minimum and maximum interest rates. A high interest rate can drive up your payments, and your franchise’s income needs to be able to support those higher payments.
  • Qualification process: Will you qualify for funding? Factors like the required minimum credit score, annual revenue, and business history can help you to tell whether you should apply.
  • Customer support: If you need help, can you get in touch with a live customer service representative? Is multi-channel support available, so you can get the help you need even when you’re also busy running your franchise?
  • Online user reviews: Consider what other customers are saying about their experience with the lender on sites like Trustpilot.
  • Perks and Bonuses: Are there other reasons to choose the lender, like perks like payment flexibility, advertising transparency, and advanced technology?
How to choose the best franchise financing option.'s methodology for reviewing the best franchise financing option.


Franchise Financing Options Main Features

CompanyMin. Credit ScoreMin. Time in BusinessMin. RevenueLoan AmountInterest Rate
Lendzi5006 months$180,000Up to $400,000Factor rates starting at 1.15
Upstart55012 monthsN/A$5,000 to $200,000Max 35.99% APR
Biz2Credit66018 months$250,000$25,000 to $500,0007.99%
Fundbox600+ 6 months$100,000 for line of creditNot disclosedNot disclosed
Bluevine6006 months$10,000 in monthly revenueUp to $250,0004.8%
TorroNot disclosedNot disclosedNot disclosedUp to $575,000 Not disclosed
SmartBizNot disclosed2 yearsNot disclosed$30,000 to $500,000 for bank term loans6.99% for bank term loans


What is Franchise Financing?

A franchise is a joint venture between a franchisor and several franchisees. The franchisor is an original, successful business that sells the right to use its name, ideas, and products. The franchisees buy this right to trade under an existing business model.

Franchise financing is a term given to the process of securing a loan for getting your franchise business started. More prominent brands assist these individual stores with trade secrets, marketing, business plans, and other resources to help them succeed.

While franchises are an excellent way to ensure that you have a solid business plan in place, buying into these businesses can be expensive.


Insights Into The World of Loans for Franchises

Start-up costs for owning a franchise can vary from thousands to a few million dollars for some of the more popular franchises. While many franchises will require a franchisee to have a substantial net worth, one can purchase a franchise for $50,000 or less.

The franchisor will charge an initial franchise fee or license fee. Also, there will be a royalty payable based on the franchised outlet's financial performance. Besides this fee and costs, you may be restricted to selling only the stock or goods supplied by the franchisor.


How Much Does It Cost to Start a Franchise?

Buying into a franchise can be costly. The following are the costs that you should expect.

  • Initial franchise fee: an initial fee is payable to the franchisor for the purchase of your business.
  • Recurring franchise fees: these are often referred to as royalties, which are ongoing fees that you'll pay (usually monthly) to the franchisor as part of the original agreement.
  • Marketing fees: the franchisor will most likely take care of the marketing for the brand as a whole.
  • Required purchases: franchisors may require that you purchase certain goods or services for use within your store.
  • Build out costs: Once you have secured your franchise outlet, you will have to pay initial rental plus a deposit, start renovating your premises, shopfitting, and so on.
  • Hiring costs: there will be costs involved with the hiring and training of employees.


Things to Know Before Taking Out Franchise Financing Loan

Franchise loans are available for franchisees, but it's essential that you come armed with the following before approaching franchise financing lenders or a franchise financing company itself.

  • Business and Personal Budgets: You will need to budget for the usual business expenses such as rental for the business premises, stock, salaries and wages, insurance, and other overheads. Then you must cover your salary and set an amount aside for unforeseen expenses. Set your goal for breaking even in the first year.
  • Your Personal Net Worth: Net worth refers to how much capital you can access to invest in your franchise and tells franchisors and those in the franchise financing business how well you have managed your money historically.
  • Financing Options: Do your best to know more or less what your financing needs and options will be. We will discuss these options in the next section.
  • Time to Profitability: The franchisor and other franchisees in a chain should know how long it takes to become profitable. Speaking to them should give you a fair indication for inclusion in your forecasting.
  • Developing Relationships: One of the biggest causes of franchise failure is because would-be franchisees go into a business with their eyes closed. We suggest that you develop as close a relationship as possible with the franchisor and the bank or lender that will finance you.


Where to Get a Loan for a Franchise?

The following are five different types of small business loans for a franchise.

1. Bank Loans

You will probably find that a successful franchisor's bank will be open to financing franchise opportunities based on its franchise client's track record.

Banks, however, tend to require more substantial documentation and will look at the prospective owner's credit rating and any other business credit ratings more closely.

A bank also tends to require self-contribution from a prospective franchisee and consider any available collateral.

2. SBA Loans

Another possibility is raising a loan guaranteed by the Small Business Administration (SBA). These loans typically offer attractive rates and terms. You should note that the SBA itself does not make loans, though.

Instead, it partners with a financial institution that makes the loan; then, the SBA undertakes to repay a significant portion thereof in the event of default.

3. Retirement Funds

Should you have a 401(k) or 403(b) retirement account, you might be able to borrow against it to fund a business—including a franchise.

There are many restrictions against using retirement funds for anything other than retirement, so be careful and seek a tax professional's guidance when considering this option.

4. Small Business Credit Card

Small business credit cards can be another road to take. They often provide high credit limits, which could make it possible to finance a low-cost franchise with a balance transfer—where the funds are deposited into your business bank account.

This carries its risks, of course, meaning that you could be looking at exorbitant interest rates on your outstanding balance. If handled properly, it could provide you with a good business credit rating further down the line.

5. Franchisor Financing

Two weeks before you purchase a franchise, the franchisor must provide you with a Franchise Disclosure Document (FDD). This document should contain any information about whether the franchisor offers to finance or may finance through one of its established lending partners.



Finding the right financing option can help franchise owners to successfully run their businesses. Financing options like short term business loans and lines of credit allow business owners to navigate challenging cash flow times, invest in business equipment, pay for renovations and expansions, and make other important investments in their business. As you explore these franchise financing options, be sure to consider factors like loan amounts, loan terms, interest rates, and eligibility requirements to determine which option is best for your business.

Frequently Asked Questions(FAQ)

How Can I Afford a Franchise?
The startup costs of a franchise can vary from $10,000 to $1,000,000. Generally, lenders want you to pay 25% of the Franchise Cost, and they will loan you the rest. Aside from Franchise Financing, you could either try online lenders for loan amounts up to $250,000 or the SBA for larger loan amounts (above $250,000).
What Are the Starting Costs to Operate a Franchise?
You have to pay a fee to join the franchise. This fee is typically between $10,000 and $40,000. The cost for operating the franchise will be outlined in the Franchise Disclosure Document (‘FDD’). This document will include real estate, equipment, inventory, signage, business licenses, insurance costs, etc.
Do Franchise Owners Make Money?
A franchise is safer to start, than a small business, if you have the funds because you have the franchise's marketing and expertise behind you. How much franchise owners make depends on their industry and their skill. Some go on to own multiple franchises and earn a lot of money. Others make less than $50,000 a year.
Why Are Some Franchises so Expensive and Some so Cheap?
Almost everybody is familiar with McDonald’s and Starbucks, so here you are leveraging brand reputation. The nature of the franchise contract will also play a role. The initial investment may not include real estate, buildings, machinery, and equipment. The franchise industry is also important. Buying into the Hilton Hotel franchise will be more expensive than opening a Starbucks coffee shop.
Should I Open a Franchise or a Regular Business?
When you open a franchise business, the franchisor offers an established method of conducting business, continual guidance, assistance, and systems. You will need to make periodic payments of fees and purchases. If a franchise doesn’t seem right for you, you can consider opening a regular business. This approach is generally less costly.
Where Can I Find Financing to Open a Franchise?
The most obvious form of funding will be from the franchisor. However, you have to bring something to the table, meaning you must already have cash and a strong business record. Failing this, you can try commercial bank loans, SBA loans, or online lenders to get the requisite funding.

About the Author

Paige Cerulli

Paige Cerulli

Business Content Writer

Paige Cerulli is a content writer and copywriter who specializes in business, finance, pet, and health topics. An entrepreneur herself, Paige enjoys writing about topics that help business owners to make well-informed strategic decisions.

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