Best Franchise Loans

Total Rating	4.8
Rates & Fees5.0 Pricing 5.0 Affordability 5.0
Services5.0
Eligibility Requirements4.9
Application4.5
Sales & Advertising Transparency4.4 Sales Practices 4.0 Web Presence 5.0
Customer Service4.9
User Reviews4.9

Pros

High borrowing amounts
Low credit score requirements
Multiple types of financing available

Cons

Rates can be expensive
Funds can take awhile to disburse
Application process can be slow

Why We Chose Lendio For Best Marketplace For Franchisees

Lendio is loan aggregator, so you can apply to every lender within its network with a single application. Lendio provides funding options for businesses that may otherwise struggle to find funding, or that can’t spare the time necessary to hunt down an ideal lender.

Lendio can be a one-stop shop for franchises with terms loans, lines of credit, equipment financing, and SBA 7(a) loans available to qualified applicants.

Lendio Services

Lendio offers nearly any type of funding you need for your business, including:

Short-term loans up to $500,000
Term loans up to $2 million
Lines of credit up to $500,000
Merchant cash advances up to $200,000
SBA loans up to $5 million
Equipment financing up to $5 million

Lendio Rates & Fees

Lendio’s rates and fees vary based on product type and the lender you select. Lendio has long-term, low-interest options such as SBA loans for well-qualified borrowers, as well as more expensive, short-term funding like MCAs for borrowers with bad credit or other challenges.

Lendio Eligibility Requirements

Lendio works with 75+ lenders, and each lender has its own set of eligibility requirements for funding. However, Lendio recommends having a credit score of at least 550 to qualify.

While Lendio doesn’t have specific revenue or time in business requirements, established and profitable businesses will qualify for products with better rates and terms.

Choose Lendio If...

You want to easily compare your franchise loan options with a single application
You’re a new business, have low revenues, or have credit challenges and aren’t sure what funding you qualify for

Get Started With Lendio

OnDeck: Best Franchise Loans For Borrowers With Fair Credit

OnDeck

Total Rating	3.9
Rates & Fees4.6 Pricing 5.0 Affordability 4.2
Services2.9
Eligibility Requirements3.8
Application4.5
Sales & Advertising Transparency3.8 Sales Practices 4.0 Web Presence 3.5
Customer Service4.1
User Reviews4.0

Pros

Lower borrower qualifications than banks
Lower costs for repeat customers
Fast and easy application

Cons

Financing isn’t available in some states
Rates can be expensive

Why We Chose OnDeck For Borrowers With Fair Credit

If you have a newer franchise or need capital ASAP, OnDeck is one of the easiest and quickest ways to get a short-term loan up to $250K or a line of credit up to $100K. Though OnDeck isn’t specifically geared toward franchise owners, it’s a viable online loan option for any small business owner who doesn’t qualify for a bank loan or doesn’t want to wait months to receive loan funds.

OnDeck’s borrower requirements are much more relaxed than those for a bank or SBA loan, and time-to-funding is super speedy. The entire process, from starting your application to receiving your funds, usually only takes a couple of days. Same-day funding for short-term loans and instant funding for LOCs is available for some borrowers.

OnDeck Services

OnDeck offers:

Term loans up to $250,000
Lines of credit up to $100,000

OnDeck Rates & Fees

For OnDeck’s term loans, APRs range from 29.9% to 97.3%, although the lender discloses that the average rate is 55.8%. An origination fee of up to 5% may apply.

OnDeck’s lines of credit have APRs that range from 29.9% to 65.9%, and OnDeck discloses that most borrowers pay around 56%. There are no origination fees, but a $20 monthly maintenance fee will apply to most borrowers.

OnDeck Eligibility Requirements

These minimum requirements must be met to receive an OnDeck term loan or line of credit

1 year in business
$100,00 per year in revenue
625+ credit score

Choose OnDeck If...

You want to choose between a loan or line of credit without having to meet the high borrower requirements imposed by banks
You want fast funding that can hit potentially hit your account the same day you’re approved

Get Started With OnDeck

Credibly: Best Franchise Loans For Borrowers With Bad Credit

Credibly

Visit Site

Get Started With Credibly

Total Rating	3.6
Rates & Fees3.1 Pricing 3.7 Affordability 2.4
Services3.7
Eligibility Requirements3.3
Application4.0
Sales & Advertising Transparency3.6 Sales Practices 3.0 Web Presence 4.5
Customer Service4.3
User Reviews4.0

Pros

Low credit score requirements
Discounts for repaying early
Fast and easy application

Cons

Rates can be expensive
Some additional fees charged
A blanket lien is required

Why We Chose Credibly For Borrowers With Bad Credit

Bad credit is often a major obstacle to getting the franchise financing you need, but it doesn’t need to be an impassable roadblock. Lenders such as Credibly can be a good fallback option for borrowers cut off from other sources due to their credit. With relaxed borrowing requirements, Credibly’s loans should be accessible to most franchisees.

Credibly Services

Credibly offers:

Short-term loans up to $400,000
Merchant cash advances up to $400,000
Term loans up to $250,000
Lines of credit up to $250,000
Equipment financing up to $400,000

Credibly Rates & Fees

Credibly’s factor rates for short-term funding start at 1.11. Rates and fees for long-term funding is undisclosed.

Credibly Eligibility Requirements

To qualify for funding through Credibly, you’ll need:

6 months in business
$15,000 per month in revenue
500+ credit score

Additional requirements must be met for certain other types of funding.

Choose Credibly If...

You have a low credit score and don’t qualify for funding elsewhere
You own a newer franchise that has only been in operations for at least six months

Fundbox: Best Line Of Credit For Franchisees

Fundbox

Total Rating	3.8
Rates & Fees3.1 Pricing 2.3 Affordability 3.8
Services3.6
Eligibility Requirements4.5
Application4.8
Sales & Advertising Transparency3.8 Sales Practices 4.0 Web Presence 3.5
Customer Service3.0
User Reviews4.4

Pros

Low credit score requirements
Funds are disbursed quickly

Cons

Rates can be expensive
No long-term financing options

Why We Chose Fundbox For Best Line Of Credit For Franchisees

Fundbox’s easy borrower qualifications can make it a great choice for franchisees facing uncertain startup costs. Fundbox’s lines of credit can cover a broad range of expenses, including franchise fees, landscaping, and co-marketing fees. The best part? You’ll only pay interest on the amount of credit that you use.

Fundbox Services

Fundbox offers business lines of credit up to $150,000 for eligible borrowers.

Fundbox Rates & Fees

Fundbox’s rates start at 4.66% for 12-week repayment terms and 8.99% for LOCs with 24-week repayment terms.

Fundbox Eligibility Requirements

To qualify for a Fundbox line of credit you must meet these requirements:

6 months in business
$100,000 per year in revenue
600+ credit score

Choose Fundbox If...

You want a flexible line of credit that can be used as needed for franchise expenses
You have a lower credit score or newer franchise and need fast funding

Get Started With Fundbox

Funding Circle: Best Loans For Restaurant Franchises

Funding Circle

Get Started With Funding Circle

Total Rating	4.2
Rates & Fees4.6 Pricing 5.0 Affordability 4.2
Services4.0
Eligibility Requirements3.8
Application4.3
Sales & Advertising Transparency4.8 Sales Practices 5.0 Web Presence 4.5
Customer Service4.5
User Reviews3.2

Pros

Monthly repayments
No prepayment penalty
Lower qualifications than banks

Cons

Some additional fees
Financing isn’t available in some states

Why We Chose Funding Circle For Restaurant Franchises

Funding Circle has numerous franchise partners across the US, including Papa John’s, Pinkberry, Quiznos, and many others. This lender is very flexible, offering various loan products through partnered lenders for franchises in different stages of growth.

For qualified applicants, Funding Circle has the advantage of offering faster funding than a bank and having relatively low rates and fees. While Funding Circle is ideal for restaurant franchises, other franchises may benefit from the lender's low-cost loans.

Funding Circle Services

Funding Circle offers:

Terms loans up to $500,000
Lines of credit up to $250,000
Merchant cash advances
SBA loans

Funding Circle Rates & Fees

Funding Circle’s interest rates start around 4.99% and top out around 27.99%. Term loans have an origination fee of 3.49% to 6.99%. Lines of credit have a draw fee of 1.6%.

Funding Circle Eligibility Requirements

To qualify for funding from Funding Circle, you need to meet these requirements:

2 years in business
660+ credit score

Choose Funding Circle If...

You have an established business and want competitive rates and terms
You want your choice of several loan options, including SBA loans

Business Loan & Funding Products Review Methodology

We spend hours researching and evaluating each business loan and funding product that we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.

When rating lenders and funding providers, we use a 31-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating. This rubric is applied to traditional term loans, as well as short-term loans, start-up loans, lines of credit, online lending products, merchant cash advances, and equipment financing products.

Rates & Fees: 20% of the total star rating
Services: 20% of the total star rating
Eligibility Requirements: 20% of the total star rating
Application: 15% of the total star rating
Sales & Advertising Transparency: 10% of the total star rating
Customer Support: 5% of the total star rating
User Reviews: 5% of the total star rating

Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the lending product, customer support, and the overall reputation of the lender or funding provider.

Read more about how we rate small business lenders.

How Much Can I Borrow For A Franchise?

The amount of money you can borrow for a franchise will vary depending on a number of factors:

Your revenue
Your creditworthiness
Any other debt you’re currently servicing
The lender you apply to
The franchise you’re looking to buy

There is, however, no hard limit on the amount of money you can theoretically borrow for a franchise.

Can You Use An SBA Loan To Start A Franchise?

SBA loans can be used to start a franchise. In fact, the long repayment terms, high borrowing amounts, and relatively low rates of SBA loans can be ideal for franchise financing. Both SBA 7(a) loans and SBA 504 loans can be used to fund franchises.

You can find SBA-affiliated lenders on our list above or in our list of best SBA lenders.

How To Improve Your Chances Of Being Approved For Franchise Financing

Getting approved for franchise financing can be difficult, particularly if you need startup funds, you need funding but have bad credit, or your franchise has been open for less than a year. However, you can do a few things to improve your chances of being approved for financing, even if it means you may have to take on a personal guarantee.

Consider Franchisor Financing

Depending on where you are in the franchise process, you may or may not know that many franchises offer an in-house financing option to pay the franchise fee, equipment, and other startup costs.

As a first-time franchise owner, in-house franchisor financing may be your best bet if your franchisor offers such an option. If you meet the requirements for other loans, compare the lending rates your franchisor provides you and those of outside lenders to ensure you get the best deal you qualify for.

Write A Strong Business Plan

Even as a franchisee of an established franchise brand, you still need to have a plan because no two franchises are the same. Having a solid business plan in place shows potential lenders that you know what it takes to run a successful business and will improve the likelihood that your application will be approved.

Having a plan is essential not just for your loan application package but also to inform your decisions as a business owner. Among other pieces of information about your business, the plan should include a detailed overview of the franchise’s financial situation, including how much money you need and what you will do with it. For some online loans, you might only need a one-page business plan; you will likely need a more detailed plan for a bank or SBA loan.

Apply To More Than One Lender

Keep in mind that when you’re applying for a business loan, whether it’s for startup costs, working capital, or real estate, it’s a good idea to complete more than one loan application to compare rates and terms. This way, you can be sure that you get the best-priced loan you qualify for.

Applying to multiple lenders also improves the chances that at least one lender will accept you. Most lenders will only do a “soft” pull on your credit in the prequalification stage. They will not do a hard pull (the kind that dings your credit score) unless you accept the loan offer.

You can apply for different business loans individually or use a loan aggregation service like Lendio or BusinessLoans.com.

Look Into Alternative Financing

If you don’t qualify for traditional business financing, you can look into alternative financing that you are more likely to be approved for. For example, you might consider:

An online personal loan
A home equity loan or line of credit
A Rollovers As Business Startups (ROBS) plan

You may also consider forming a business partnership if you can’t afford to buy a franchise on your own. Or you could borrow the funds you need from a friend or family member. For more ideas, read our post on how to become a franchise owner on a budget.

Which Franchise Business Loan Is Right For You?

Online business lenders represent an important part of the financing industry, as bank loans remain out of reach for many entrepreneurs. Franchise owners benefit from online franchise loans, which have less-strict borrower qualifications than traditional business or SBA loans and put the funds in your account a lot faster.

Generally, online loans have higher rates than bank loans. However, they can be crucial sources of capital to many small business owners, including franchise owners, who would not otherwise qualify for financing. Moreover, some of the best online lenders offer rates that are on par with big banks.

Finally, you must do your research before diving into any franchise brand. Read up on how franchises work, look at franchise opportunities on sites such as the International Franchise Association, and look for SBA-affiliated franchises in the SBA Franchise Directory. Read the franchise disclosure document carefully before signing a franchise agreement, and be sure you’re ready to commit to a relationship with the franchise brand of your choice.

Happy applying, and best of luck buying and growing your franchise!

FAQs: Best Franchise Loans

Do banks give loans for franchises?

Many banks offer loans for franchises; just be aware that banks tend to have more stringent qualifications for business lending.

How do you qualify for a franchise loan?

Qualifications for franchise loans vary between lenders. The longer you’ve been in business, the higher your revenue, and the better your credit score, the easier time you’ll have with qualifying.

How can I get a business loan for a franchise startup?

A good first place to look for a business loan for a franchise startup is to find out if your franchisor offers in-house financing. Failing that, look for lenders that service the type of franchise you’re looking to buy.

Which loans are best for franchise startups?

Since buying a franchise can be quite costly, you’ll probably want a long-term loan with reasonably low-interest rates. A good place to start looking is with your franchisor itself, as they may offer in-house financing geared toward your circumstances.

Bio
LinkedIn
Latest Posts

Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica began writing on small business topics in 2008. She joined Merchant Maverick in 2018 and focuses on loans, accounting, and POS. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll. She has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a graduate of Limestone University and resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.

Latest posts by Erica Seppala (see all)

Paychex ERTC Service Review - February 6, 2024
Venmo Taxes: When To Expect Form 1099-K - February 2, 2024
The Complete Guide To Filing Self-Employment Taxes - February 1, 2024
The Complete Guide To Filing Small Business Taxes For The First Time - January 31, 2024
The Beginner’s Tax Guide For Small Business - January 31, 2024

Show less

1. Lendio

❮ ❯

Short-term loans, term loans, lines of credit, merchant cash advances, SBA loans, equipment financing
FICO: Varies by lender
APR: Varies by lender

2. OnDeck

❮ ❯

Term loans, lines of credit
FICO: 625+
APR: 29.9%

3. Credibly

❮ ❯

Term loans, short-term loans, merchant cash advances, lines of credit, SBA loans, equipment financing, invoice factoring
FICO: 500+
Interest rates: Varies

Visit Site

4. Fundbox

❮ ❯

Lines of credit
FICO: 600+
APR: 4.66%+

5. Funding Circle

❮ ❯

Term loans, lines of credit, merchant cash advances, SBA loans
FICO: 660+
Interest rate: 4.99%+