SBA Loan Requirements for Franchise Buyers
Credit score, equity injection, work history, post-close liquidity — here's what lenders actually require.
SBA 7(a) loans are the most common franchise financing vehicle. Lenders look at the same handful of variables across nearly every franchise loan application.
Credit Score
Most franchise lenders require a personal FICO of 680 or higher. Some specialty lenders will go to 650 with strong compensating factors. Below 650, expect difficulty.
Equity Injection
10–15% of total project cost in cash. The cash must be 'sourced and seasoned' — verifiable, in your account for 60+ days, and not borrowed. Gifts from family are allowed with proper documentation.
Post-Close Liquidity
Lenders want to see 6–12 months of personal living expenses remaining after closing. This protects against the ramp period before the business produces income.
Industry Experience
Direct industry experience is not required for most franchise loans. Lenders look at transferable management or sales experience. The franchisor's training is considered a mitigating factor.
Personal Guarantee
Everyone with 20%+ ownership signs a personal guarantee. The SBA does not waive this.
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