How do I apply for an SBA franchise loan?

You’ll apply through an SBA-approved lender (not directly to the SBA). Many banks and specialized finance companies offer SBA loans. The application will involve detailed paperwork – franchise agreement, financial statements, tax returns, business plan, etc. It’s wise to work with a lender experienced in franchise lending. At Liberty Franchise Lending , we assist borrowers in preparing a complete SBA loan package and connect you with SBA preferred lending partners. This guidance can significantly improve your chances of approval. To start, you usually have an initial consultation or pre-qualification, then fill out the lender’s SBA loan application forms and provide documentation. The lender will handle submitting the loan to SBA for approval once they underwrite it.

Can I use an SBA loan to expand an existing franchise or buy additional franchise units?

Absolutely. SBA 7(a) loans can be used for expansion, whether that means opening a second (or third, etc.) location or buying out another franchisee’s store. The process is similar – you’d show the costs of expansion or the purchase price of the existing unit. In fact, expanding with an SBA loan once your first location is doing well is a common growth strategy. Just remember that your total SBA loans outstanding can’t exceed the $5 million cap, so very large multi-unit expansions might need to consider alternative financing once you hit that ceiling.

How much of a down payment is required for an SBA franchise loan?

It can vary, but generally 10%–20% of the total project cost is expected as your equity contribution. If you’re opening a new unit, the franchisor may require a certain net worth or liquid capital anyway, which overlaps with this. For purchasing an existing franchise (business acquisition), 7(a) loans officially require at least 10% equity injection; in practice lenders often like to see around 20% from the buyer. Sometimes, part of this can be a seller financing note (for an acquisition) if the seller keeps some skin in the game. Always check with your lender on the specific down payment needed for your situation.

Do I need collateral or can I get an SBA loan without it?

SBA loans do not require collateral up to certain amounts (loans under $25,000 have no collateral requirement, for example). For larger loans, the SBA says the lender must take collateral when available – which often means pledging your business assets like equipment, and possibly personal real estate if the loan is substantial. However, the SBA will not decline a loan solely due to lack of collateral as long as other factors are strong. So, if you don’t have a house to pledge, but your franchise projections and credit are good, you could still get the loan. Just expect to sign a personal guarantee regardless.

How long does it take to get approved and receive funds?

It’s typically not fast – often about 2 to 3 months from application to funding. The process involves application, document collection, lender underwriting, SBA approval, and closing. Working with experienced SBA lenders (like Liberty Franchise Lending’s partner banks) can help streamline this timeline. In some cases, SBA Express loans (for smaller amounts) may fund faster, potentially in a few weeks, but for larger loans expect a few months.

Can I get an SBA franchise loan for a brand-new franchise startup?

Yes. SBA 7(a) loans are commonly used to fund new franchise locations. You’ll need to meet the lender’s qualifications (good credit, some down payment, etc.) and the franchisor must be SBA-approved. Many first-time franchise owners use SBA loans to cover initial franchise fees, build-out, equipment, and opening working capital all in one package.

How do I get started and is there a fee to apply?

Getting started is easy and costs nothing upfront. You can either call us or fill out our online contact form to schedule a consultation. Our initial consultation and pre-qualification review are free of charge and come with no obligations. During this process, we’ll discuss your goals and ask you to provide some basic financial info to see what you might qualify for. If you decide to move forward with a loan application, there may eventually be standard costs like credit report fees or appraisal fees (depending on the loan), but we will never charge surprise fees . We are transparent about any costs before you incur them. Our goal is to help you find the right financing, and we only succeed when you do.

Do you operate in my state?

Yes! We serve clients in all 50 states . Liberty Franchise Lending is licensed and equipped to provide franchise financing nationwide across the United States. So whether your franchise is in Texas, California, New York, Florida – you name it – we can help. We understand local market nuances but provide the same high-quality service no matter where you are. Our process is largely remote, via phone and online, which makes it convenient for you.

What can I use a franchise loan for?

Franchise loan proceeds can typically be used for all the major expenses involved in starting or running your franchise. This includes: franchise license fees , location costs (like leasing a storefront or building and doing construction build-out), equipment and machinery , inventory stock , working capital to cover payroll/operational expenses until the business breaks even, marketing and grand opening expenses , and even refinancing existing business debt . Different loan types have different rules (for example, SBA 7(a) loans are very flexible on use of funds, whereas an equipment loan must be used to buy equipment). We’ll ensure your loan covers everything you need and complies with the lender’s guidelines.

Is Liberty Franchise Lending a direct lender or a broker?

We are a franchise financing specialist that operates as a lender and strategic broker. What that means is: in some cases we may fund loans directly, and in other cases we connect you with one of our trusted lending partners or programs best suited to your needs. Either way, you’ll work closely with us from start to finish. We handle the coordination with the actual funding source behind the scenes. This hybrid approach allows us to offer you more options and always get you the most competitive terms available. There’s no extra cost to you for this service – we’re compensated by the lenders, or through standard loan fees, not by charging our clients expensive consulting fees.

FAQs Archive - Page 3 of 4 - Liberty Franchise Lending

How do I apply for an SBA franchise loan?
Categories: SBA Loans▪
Can I use an SBA loan to expand an existing franchise or buy additional franchise units?
Categories: SBA Loans▪
How much of a down payment is required for an SBA franchise loan?
Categories: SBA Loans▪
Do I need collateral or can I get an SBA loan without it?
Categories: SBA Loans▪
How long does it take to get approved and receive funds?
Categories: SBA Loans▪
Can I get an SBA franchise loan for a brand-new franchise startup?
Categories: SBA Loans▪
How do I get started and is there a fee to apply?
Categories: Applying▪
Do you operate in my state?
Categories: General▪
What can I use a franchise loan for?
Categories: General▪
Is Liberty Franchise Lending a direct lender or a broker?
Categories: General▪

Franchise Lending Resources

How do I apply for an SBA franchise loan?

Can I use an SBA loan to expand an existing franchise or buy additional franchise units?

How much of a down payment is required for an SBA franchise loan?

Do I need collateral or can I get an SBA loan without it?

How long does it take to get approved and receive funds?

Can I get an SBA franchise loan for a brand-new franchise startup?

How do I get started and is there a fee to apply?

Do you operate in my state?

What can I use a franchise loan for?

Is Liberty Franchise Lending a direct lender or a broker?

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