Advertiser Disclosure

💳 Save money on credit card processing with one of our top 5 picks for 2022

The 5 Best Franchise Loans: Grow Your Franchise Or Secure Business Loans For Your Franchise Startup

Are you looking for business loans to start or purchase a franchise? These vendors have low borrower qualifications, easy applications, and reasonable fees.

    Chris Motola
  • UPDATED

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

Securing franchise loans to open a franchise business can be a smart choice for an aspiring entrepreneur. Becoming a franchise owner gives you the flexibility of owning a business with the added security of being part of an established brand. However, as with owning any new business, startup costs can be high, and you may require infusions of capital if you encounter hard times. Franchisees must also pay a franchise fee when opening a new franchise, as well as ongoing royalty fees. You truly need a good business plan, healthy cash flow, and solid franchise financing to succeed.

What follows are some of the best online business loans for a franchise. Remember, the best choice for you will depend on your business’s particular requirements.

Learn More About Our Top Picks

CompanySummaryNext StepsSummary

Read More

  • Best for SBA loans for franchises
  • Excellent customer support
  • Helps applicants with SBA processes
  • Best for SBA loans for franchises
  • Excellent customer support
  • Helps applicants with SBA processes

Apply Now

Read More

Read More

  • Best for borrowers with fair credit
  • Reduced rates for return customers
  • Loans and lines of credit offered
  • Best for borrowers with fair credit
  • Reduced rates for return customers
  • Loans and lines of credit offered

Apply Now

Read More

Read More

  • Best for borrowers with bad credit
  • Wide variety of lending options
  • Discounts for early repayment
  • Best for borrowers with bad credit
  • Wide variety of lending options
  • Discounts for early repayment

Visit Site

Read More

Read More

  • Best for franchise startups
  • Franchise specialist
  • High borrowing amounts
  • Best for franchise startups
  • Franchise specialist
  • High borrowing amounts

Visit Site

Read More

Read More

  • Best for restaurants
  • Multiple types of financing
  • Competitive rates and fees
  • Best for restaurants
  • Multiple types of financing
  • Competitive rates and fees

Apply Now

Read More

Show Fewer Options

Read more below to learn why we chose these options.

What Are The Best Franchise Business Loans?

We’ve compiled a list of some of the best franchise loan options for businesses outside of the traditional banking system. Franchise financing includes SBA loans, term loans, lines of credit, and more. Our top picks for franchise business loans are:

  • SmartBiz: A great choice for franchisees seeking SBA loans.
  • OnDeck: Accessible loans and lines of credit for businesses with fair credit.
  • Credibly: Numerous loan options for businesses with poor credit.
  • ApplePie Capital: Franchise specialists that will work with startups.
  • Funding Circle: Competitive rates for restaurant franchises and businesses with good credit.

1. SmartBiz: SBA Loans For Franchises

SmartBiz



Apply Now

Read our Review

Pros

  • Rates tend to be inexpensive
  • Excellent terms and fees
  • Multiple avenues of customer support

Cons

  • Some additional fees charged
  • The application process is slow and involved

SmartBiz is a viable online loan option for franchise owners who want the security and low interest rates of an SBA-backed loan but with the ease and speed of an online loan. SmartBiz does not originate loans. Instead, it is a service that matches business owners with SBA-preferred banks.

SmartBiz Features

SmartBiz offers:

  • Online SBA loans up to $5 million for commercial real estate purchases
  • Loans up to $350,000 for debt refinancing and business capital
  • Bank term loans up to $500,000

This lender is only an option for established franchises. You’ll need at least two years in business, a positive cash flow, and good personal credit.

Where SmartBiz Really Shines For Franchisees

SmartBiz is the number one marketplace for SBA 7(a) small business loans online and has an excellent reputation, customer service, and reasonable rates and fees.

If you don’t qualify for an SBA loan, SmartBiz can match you with one of its non-SBA partners to secure a loan. While SBA loans have the lowest interest rates and longest repayment terms — Prime Rate plus 1.5% to 2.75% with a term of up to 10 years for most loans — you might still be able to get a medium-term non-SBA loan with an interest rate as low as 7.99% through SmartBiz.

Get Started With SmartBiz

Read our in-depth review

Jump back to comparison chart

2. OnDeck: Franchise Loans For Borrowers With Fair Credit

OnDeck



Apply Now

Read our Review

Pros

  • Lower borrower qualifications than banks
  • Lower costs for repeat customers
  • Fast and easy application
  • Funds are disbursed quickly

Cons

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

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 Features

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

OnDeck’s rates average 62.1% for term loans and 48.9% for lines of credit. Rates are based on loans that originated in the half-year ending March 31, 2022.

Where OnDeck Really Shines For Franchisees

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.

Get Started With OnDeck

Read our in-depth review

Jump back to comparison chart

3. Credibly: Franchise Loans For Borrowers With Bad Credit

Credibly



Visit Site

Read our Review

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

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.

Credibly Features

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
  • Invoice factoring up to $400,000

Flat rates start at 15% for advances and short-term loans, while medium-term loans have an interest rate between 10% and 36%.

Where Credibly Really Shines For Franchisees

Credibly’s loans should be accessible to most businesses. To qualify for the shorter-term products, you’ll need revenue of $15,000 per month, a credit score of 500+, and been in business for six months. For the medium-term loan, you’ll need a credit score of 600+ and have been in business for three years.

Get Started With Credibly

Read our in-depth review

Jump back to comparison chart

4. ApplePie Capital: Loans For Starting A Franchise

ApplePie Capital



Visit Site

Read our Review

Pros

  • Multiple types of financing are available
  • High borrowing amounts
  • Long-term financing available
  • Franchise financing specialist

Cons

  • The application process can be slow

ApplePie Capital is an online lender that specializes in franchise financing. ApplePie currently has partnerships with over 40 franchises, including 7-Eleven, Dunkin’ Donuts, Jimmy John’s Pizza, and Wetzel’s Pretzels. Other franchise brands can get loans through ApplePie, though the process might take a little longer.

ApplePie Capital Features

  • Franchise term loans starting at $100,000
  • Equipment loans starting at $15,000
  • SBA loans

Franchise term loans are available for both new and existing franchises.

Where ApplePie Capital Really Shines For Franchisees

We like ApplePie Capital’s reasonable interest rates, relaxed borrower qualifications, and easy application. ApplePie will approve loans even to brand-new, first-time franchise operators. While it doesn’t list specific borrower qualifications on its website, the main requirement is that you work with one of ApplePie Capital’s partnered franchises.

Get Started With ApplePie Capital

Read our in-depth review

Jump back to comparison chart

5. Funding Circle: Loans For Restaurant Franchises (And More)

Funding Circle



Apply Now

Read our Review

Pros

  • High borrowing amounts
  • Monthly repayments
  • No prepayment penalty
  • Few additional fees

Cons

  • Borrower qualifications might be hard to meet
  • Financing isn’t available in some states

Funding Circle offers various business lending products, including medium-term installment loans with repayment periods as long as five years, which are ideal for established business owners with a strong credit history.

Funding Circle Features

Funding Circle offers:

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

Where Funding Circle Really Shines For Franchisees

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’s application process takes a little longer than some other online lenders, it is still much quicker and easier than getting a bank loan. Funding Circle loans aren’t suitable for aspiring franchisees who haven’t opened up shop yet, but it should definitely be on your shortlist if you have an existing franchise.

Get Started With Funding Circle

Read our in-depth review

Jump back to comparison chart

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.

1) 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.

2) 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.

Learn more loan application tips to improve your business loan application.

3) 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, such as SmartBiz (described earlier in this post), Lendio, or Fundera.

4) 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:

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.

And if you want even more information on purchasing a franchise, read our step-by-step guide to buying a franchise. Happy applying, and best of luck buying and growing your franchise!

Are you looking for more general loan resources? Check out our list of the best business loans and best small business loans for startups

FAQs: Franchise Loans

Can I get a loan to franchise an existing business?

You can get a loan to franchise an existing business. In fact, many lenders prefer to work with established businesses.

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.

In Summary: What Are The Best Franchise Business Loans?

  1. SmartBiz:
    • Best for SBA loans for franchises
    • Excellent customer support
    • Helps applicants with SBA processes
  2. OnDeck:
    • Best for borrowers with fair credit
    • Reduced rates for return customers
    • Loans and lines of credit offered
  3. Credibly:
    • Best for borrowers with bad credit
    • Wide variety of lending options
    • Discounts for early repayment
  4. ApplePie Capital:
    • Best for franchise startups
    • Franchise specialist
    • High borrowing amounts
  5. Funding Circle:
    • Best for restaurants
    • Multiple types of financing
    • Competitive rates and fees
Chris Motola

Chris Motola

Expert Analyst & Reviewer at Merchant Maverick
An expert in personal and business loans and financial health, Chris Motola has been writing about small business finance and payments for over 5 years. He has been cited in various industry publications, including Forbes Advisor, GoBankingRates, and Medium. Chris is a graduate of the University of Central Florida.
Chris Motola
View Chris Motola's professional experience on LinkedIn.

We Want Your Feedback!

Help us to improve by providing some feedback on your experience today.

The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.

Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.

Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

Our Experts Recommend OnDeck 🏆 Easier borrower qualifications that help you build business credit. Fast turnaround: as little as 1-2 days. Multiple types of financing and lower costs with a fast and easy application process. Apply Now Get funded quickly

Sign up for the Maverick Newsletter

  • Please select topics of interest

  • We occasionally send out emails with special offers.
  • Hidden
  • This field is for validation purposes and should be left unchanged.