Starting a franchise gives you the chance to run your own business while benefiting from a brand that’s already proven to work. You get built-in marketing, systems, and support, making it easier to hit the ground running.
Of course, that kind of head start comes with upfront costs. Between franchise fees, equipment, and setup expenses, the investment can feel out of reach, especially if you're low on working capital.
But there are several ways to make it happen. From small business loans for franchise startups to specialized franchise financing programs, the right funding can help cover costs and get you up and running. Some entrepreneurs also look into an SBA loan for franchise ownership, or even explore how to finance a franchise with no money by using creative strategies.
What is Franchise Financing
Franchise financing helps cover the startup costs involved in launching a franchise. From equipment and signage to inventory and lease deposits, these early expenses can add up fast, and most owners don’t have the full amount on hand.
If you’re buying into a franchise, many lenders offer franchise loans tailored to this business model. These loans can fund everything from your initial build-out to day-one operations.
However, even with financing, lenders typically want you to contribute a portion of the total cost—often between 10% and 20%—to show you're invested in the business's success. Once your contribution is secured, the rest of the funding can help you move forward with setup and launch.
Whether you’re a first-time owner or growing your portfolio, financing gives you the resources needed to start strong without draining your personal savings.
Franchise Loan Options: Where to Start When You Need Funds
Trying to figure out how to finance a franchise with no money up front? You’re not alone. Starting costs can be high, but the good news is that there are multiple ways to make it work, even if your savings are limited.
Plenty of new owners raise the amount they need using a combination of franchise business loans, personal capital, and other funding sources. The key is knowing your options and choosing what fits your goals and situation.
Here are a few popular routes to explore when you’re researching franchise loans:
1. Franchise Financing
Franchise financing can be one of the easiest ways to get started, especially when offered directly through the franchisor. While not all brands provide in-house loans, many have partnerships with preferred lenders who are familiar with their business model and understand the typical startup costs.
This type of franchise business loan is often easier to secure because the lender already knows the brand’s track record and potential for profitability. That makes the approval process quicker and less complicated.
A major advantage is the convenience. These financing programs are usually designed to cover all major expenses, including:
- Equipment and inventory
- Lease deposits and real estate
- Build-out and renovation costs
- Franchise fees
Some lenders even offer flexible repayment options, such as deferred payments during your initial ramp-up or schedules that align with seasonal revenue trends. For many new owners, franchise loans with this kind of built-in support make launching the business smoother and less stressful.
2. Commercial or Traditional Bank Loans
Traditional bank loans are a common route for many franchise owners. They work similarly to a mortgage or auto loan, where you receive a lump sum upfront and repay it over time in fixed monthly installments with interest.
Banks, credit unions, and other financial institutions often offer these loans with competitive rates, especially if you have strong credit and a solid financial background. For well-qualified applicants, this franchise business loan can be one of the most affordable options.
However, getting approved isn’t always easy. Lenders typically have strict requirements, and qualifying for small business loans for franchise ownership means you’ll need to provide detailed financial documentation. Expect to show:
- A strong credit score
- Steady income or collateral
- A thorough business plan
- Franchise agreement details
- Projected financials and startup costs
If you’re exploring franchise loans through a traditional bank, be ready for a longer application process and more paperwork. But if you meet the criteria, this type of funding can offer low rates and longer repayment terms, ideal for long-term growth.
3. SBA Loans for Franchises
An SBA loan for franchise businesses is backed by the U.S. Small Business Administration and is known for offering lower interest rates and longer repayment terms than traditional loans. It is a strong option for new and existing franchise owners who meet the eligibility criteria.
There are two main SBA programs commonly used for franchise financing: the SBA 7(a) loan and the SBA CDC/504 loan.
SBA 7(a) Loans
This is the most flexible SBA program. Although issued through private lenders like banks or credit unions, part of the loan is guaranteed by the SBA, which helps reduce risk for lenders and improves your chances of approval.
You can use a 7(a) franchise loan to cover:
- Working capital
- Equipment and supplies
- Inventory purchases
- Renovations or real estate
- Business expansions
- Refinancing existing debt
Loan amounts can reach up to $5 million, with repayment terms ranging from 10 to 25 years, depending on how you use the funds. Due to its flexibility, it’s one of the most popular small business loans for franchise owners.
SBA CDC/504 Loans
The CDC/504 loan program is geared toward large, fixed-asset investments. It involves three sources of funding:
- 50% from a traditional lender
- 40% from a Certified Development Company (CDC)
- 10% as a down payment from you
This type of franchise financing is best suited for:
- Purchasing commercial real estate
- Buying large equipment or machinery
- Site improvements (like utilities or parking)
- Construction or facility upgrades
However, it cannot be used for payroll, inventory, or refinancing. Terms typically go up to 10 years for equipment and 25 years for real estate, making it ideal for franchise owners planning long-term growth.
4. Using Personal Funds
Some franchise owners choose to self-fund their business using savings, severance packages, home equity, or retirement accounts. This method gives you full control—no applications, no approvals, and no monthly payments tied to traditional franchise loans.
It’s fast, flexible, and puts you in charge of your timeline. You also avoid paying interest, which can help lower your startup costs early on.
That said, there are trade-offs. Using personal savings or retirement funds may impact your long-term financial security. Tapping into home equity puts your property at risk. And depleting your emergency fund can leave you exposed to unexpected business or personal expenses.
If you’re considering self-funding, take time to weigh the risk. It might make sense for some, but many franchisees still pair personal contributions with other forms of franchise financing to reduce strain and keep more options open.
5. Turning to Friends and Family
If traditional franchise loans aren’t an option due to low credit or high interest rates, friends and family might be willing to help. These are the people who already believe in you, and their support can offer flexible, low-pressure terms. You might avoid interest altogether or set a repayment schedule that fits your cash flow.
That kind of informal franchise financing can be a lifeline, especially if you're starting out with limited funds. It’s also less intimidating than applying through a bank and may be your quickest path to getting the business off the ground.
But mixing business with personal relationships isn’t always easy. If things don’t go as planned, it can create tension or strain even the strongest bonds. Disagreements over repayment timelines or ownership shares can lead to hurt feelings or broken trust.
If you go this route, treat it like any other financial agreement. Be clear about how much you’re borrowing, when you’ll pay it back, and what happens if delays arise. Putting it all in writing—even if it's only a $1,000 loan—helps protect both your relationships and your new franchise.
6. Merchant Cash Advance
If traditional financing, such as bank loans or SBA loans for franchises, feels slow or overly complicated, a merchant cash advance might be a faster, more flexible option, especially if you’re eager to move forward.
Merchant cash advances (MCAs) aren’t loans in the traditional sense. Instead, you receive a lump sum of capital in exchange for a percentage of your future sales. It’s a popular form of franchise financing for business owners who may not qualify for traditional franchise loans due to credit issues or limited paperwork.
What makes this option appealing is speed. With online lenders like Giggle Finance, the application process is quick, approval is straightforward, and funds can land in your account in as little as 24–48 hours. That kind of turnaround can be a huge advantage if you’re trying to secure equipment, sign a lease, or cover launch expenses without delay.
MCAs are also more forgiving when it comes to credit history and documentation. And if you're already using another type of funding—like an SBA loan—but still need a capital boost, a merchant cash advance can help fill the gap.
Giggle Finance specializes in helping franchise owners and independent operators get the working capital they need without the red tape. Apply now and see how our flexible cash advance can support your next step.
How to Get Approved for a Franchise Loan
Getting approved for franchise business loans involves preparation, strategy, and knowing how to present yourself as a trustworthy borrower. Here’s how to improve your odds—step by step.
1. Start with the Franchisor
Before contacting lenders, speak with your franchise brand. Some offer internal financing or can introduce you to lenders who’ve funded previous franchisees. These lenders may offer lower rates, faster approvals, or tailored loan packages based on typical costs. They’ve seen the model work before, which makes you a safer bet in their eyes.
Tip: Ask for a list of “preferred lenders” and any historical loan performance stats they can share.
2. Check SBA Eligibility
Not every franchise qualifies for an SBA loan for franchise purchases. However, if your brand is listed in the SBA Franchise Directory, it signals that the business has been vetted and meets key standards. This opens doors to SBA-backed loans with better terms and fewer surprises.
Tip: Use the SBA’s online directory to verify eligibility. This can save time and help you focus on lenders who work with SBA-compliant franchises.
3. Know Your Credit Score
Your personal credit is one of the first things lenders review. Higher scores give you access to better terms, like lower interest rates or longer repayment timelines. But even if your score is lower, knowing where you stand helps you prepare. You might bring on a co-signer, offer more collateral, or choose a lender who focuses on alternative credit models.
Tip: Dispute any credit report errors at least 30 days before applying. Quick fixes can make a big difference.
4. Prepare Collateral
Lenders want assurance they’ll be repaid, especially with larger small business loans for franchise startups. Collateral lowers their risk and increases your borrowing power. You can use property, savings, business equipment, or accounts receivable.
Tip: You don’t always need to own real estate. Explore non-traditional assets or consider a blanket lien on business assets if available.
5. Have a Down Payment
Even if you’re learning how to finance a franchise with no money, be ready to put something down. Most lenders want to see that you’ve got skin in the game. It proves commitment and reduces default risk. If savings are limited, consider combining smaller sources, like a personal loan plus a grant or investor contribution.
Tip: Down payment requirements can vary. SBA 7(a) loans often require 10–20%, while traditional lenders might want more, depending on your profile.
6. Build a Business Plan
Your business plan tells lenders how you’ll use the money and how you’ll pay it back. Include franchise costs, break-even timeline, market research, staffing needs, and projected earnings. The clearer and more detailed your plan, the more confident the lender will feel.
Tip: Don’t just use a generic template. Tailor your plan to the franchise’s model, and reference data from other franchise locations when possible.
7. Include Franchise Info
Lenders care just as much about the franchise as they do about you. A strong franchise history, ongoing support system, and positive brand reputation all work in your favor. Include performance stats, franchisor training programs, and any industry accolades.
Tip: Ask the franchisor if they have an FDD (Franchise Disclosure Document) summary you can share with lenders.
8. Organize Your Paperwork
Messy documents slow down approvals. Before applying, gather your personal tax returns, bank statements, resume, legal franchise agreements, and income projections. Some lenders require three years of personal financials, even if the business is brand new.
Tip: Keep digital and printed copies handy. A cloud folder labeled by category can help you respond quickly to requests.
9. Apply to Multiple Lenders
Each lender evaluates risk differently. Applying to several increases your chances of approval and gives you negotiating power. One lender might offer a lower rate, while another is more flexible on repayment structure.
Tip: Apply to lenders that specialize in franchise loans. They tend to understand the model better than general small business lenders.
10. Be Responsive
Lenders often come back with follow-up questions. Delayed replies can slow down your approval or even cause a missed opportunity. Treat the process like a job interview: respond quickly, double-check every document, and show you’re organized and reliable.
Tip: Set calendar reminders to follow up on your application status every 3–5 business days if you haven’t heard back.
Funding Your Franchise Dreams
Launching a franchise is a big step, but it’s also a smart one. You get a head start with a trusted brand, proven systems, and built-in support. You need the right financing to bring it all to life.
From franchise business loans and SBA loans for franchises to self-funding and alternative financing, there’s more than one way to reach your goal. Whether you’re starting with limited capital or planning your next location, there’s a path forward.
And if flexibility, speed, and simplicity matter most right now, Giggle Finance can help you get there faster. Our cash advances were built with business owners like you in mind—no long wait times, no credit hurdles, just fast access to funding when you need it.
Don’t let upfront costs delay your plans.
Disclaimer: Giggle Finance provides Revenue-Based Financing programs for business purposes only. Any mention of any loan product(s), consumer product(s), or other forms of financing is solely for marketing and educational content purposes and to help distinguish Giggle Finance’s product from other comparable financing options available in the markets.