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Buying a franchise can be one of the fastest ways to launch a business with built-in brand recognition, training, and operational support. But for many entrepreneurs, the biggest question is: How do I pay for it? In this guide, we’ll explore the most common franchise financing options in the U.S. and Canada so you can choose the right strategy for your situation.
Why Franchise Financing Is Unique
Franchises come with initial franchise fees, ongoing royalties, and startup costs (equipment, real estate, staff). Unlike independent startups, franchises benefit from established systems and proven revenue models—making them attractive to lenders. That’s why specialized franchise financing options exist across North America.
Top Franchise Financing Options in the U.S.
1) SBA Loans for Franchises
- SBA 7(a) Loans: Popular for funding franchise fees, working capital, and equipment. Loan sizes up to $5M with long repayment terms.
- SBA 504 Loans: Ideal for franchise real estate or large equipment purchases.
- ✅ Tip: Many franchise brands are SBA-approved, streamlining underwriting.
2) Traditional Bank Loans & Credit Unions
Banks are often more willing to lend to franchisees because of brand backing. Expect collateral requirements and strong personal credit for approval.
3) Franchisor Financing Programs
Some franchisors offer direct financing or partnerships with preferred lenders, helping cover franchise fees or equipment. Check your franchise disclosure document (FDD).
4) Alternative & Online Lenders
Non-bank lenders offer faster approvals and flexible repayment. Good for smaller loans or bridging capital, though rates are higher than SBA or banks.
5) Retirement Rollover for Business Startups (ROBS)
In the U.S., entrepreneurs can roll over 401(k) funds tax-free to invest in a franchise—complex but effective with proper legal structuring.
Franchise Financing Options in Canada
6) Canada Small Business Financing Program (CSBFP)
This government-backed program guarantees loans from banks/credit unions for eligible franchise expenses (equipment, leaseholds, property).
7) BDC (Business Development Bank of Canada) Franchise Loans
BDC provides specialized financing tailored for franchisees, covering initial fees, equipment, and working capital.
8) Franchisor Financing in Canada
Many Canadian franchisors (especially in food, retail, and service industries) provide internal payment plans or lender introductions.
9) Credit Unions & Alternative Lenders
Regional credit unions are often flexible with franchise lending. Online lenders also provide working capital, though with shorter terms.
Other Ways to Finance a Franchise
- Home Equity Loans / HELOCs: Use personal real estate equity to fund startup costs (common among franchisees).
- Investor Partnerships: Bring in a co-owner to share startup and operational costs.
- Equipment Leasing: Finance kitchen, IT, or construction equipment separately to lower upfront franchise costs.
How to Choose the Right Franchise Financing Option
When comparing franchise financing options, ask:
- What’s the total startup cost? (franchise fee + real estate + equipment + working capital)
- How much equity do I have to inject? (most lenders require 10–30% owner equity)
- What’s my credit profile? (personal credit, business plan, DSCR all matter)
- What’s the repayment flexibility? (longer amortization = better cash flow)
- Is the franchisor SBA/CSBFP registered? (streamlines approvals)
U.S. vs. Canada: Quick Snapshot
| Country | Key Programs | Typical Loan Size | Common Uses |
| U.S. | SBA 7(a), 504, franchisor financing | $50k – $5M | Fees, real estate, equipment, working capital |
| Canada | CSBFP, BDC, franchisor loans | $30k – $1M | Franchise fees, leaseholds, equipment, property |
Ready to explore franchise financing options? Agile Solutions helps entrepreneurs structure lender-ready files, negotiate with SBA and BDC lenders, and tap franchisor financing opportunities across the U.S. and Canada.
Agile Solutions can offer the right advises to make sure you grow safely, while leveraging your quality profile.
Capital is accessible but different depending of the country your operate in.
👉 Book a consultation today at agilesolutions.global or email us at info@agilesolutions.global
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