Does the franchise need to be on the SBA Franchise Directory?

Yes. The franchise must appear on the SBA Franchise Directory, which confirms that the franchise agreement meets SBA requirements for borrower independence and control. Most major franchise brands are listed. If your franchise is not listed, the franchisor can apply for inclusion.

Can I use a seller note to reduce my equity requirement?

Yes. SBA allows seller notes as part of the equity injection, typically up to 10% of the purchase price. The seller note must be on full standby (no payments) for at least 2 years and subordinate to the SBA debt. This can reduce your cash equity to as low as 5-10%.

How does SBA 7(a) evaluate a franchise with no operating history?

For new franchise units, SBA lenders evaluate the franchise system's Item 19 financial performance representations (if available), comparable unit economics, market demographics, and the borrower's business plan projections. Franchises with strong FDD data and established unit economics receive more favorable underwriting.

What SBA lenders specialize in franchise lending?

PeerSense maintains a database of 899+ SBA lenders with detailed franchise lending preferences. Some lenders specialize in specific franchise brands (e.g., Live Oak Bank for veterinary franchises, Byline Bank for restaurant concepts). Matching you with the right franchise-focused lender significantly improves approval probability and terms.

Can I finance multiple franchise units with SBA?

Yes. SBA allows multi-unit franchise acquisitions, and some lenders specialize in multi-unit financing. Each unit may require a separate SBA loan application unless acquired simultaneously. Experienced multi-unit operators with proven cash flow from existing units often receive streamlined underwriting.

Published: March 31, 2026·Last updated: May 16, 2026·By Ed Freeman, Capital Advisor — PeerSense

What is the best financing for franchise at 80-90% (10-20% equity) LTV?

SBA 7(a) provides up to $5M for franchise acquisitions with as little as 10-20% borrower equity, depending on franchise risk profile and lender requirements. Terms range from 10 years (working capital) to 25 years (real estate), with rates tied to Prime plus a margin of 1.75-2.75%. The franchise must be listed on the SBA Franchise Directory.

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder

Prime: 6.75% 10-Yr Treasury: 4.25% Est. SBA 7(a) Range: Prime + 1.75% - 2.75% (currently ~9.25% - 10.25%)as of Mar 19, 2026

Franchise

Franchise SBA Acquisition Financing

Acquire an SBA-eligible franchise with 10-20% equity using SBA 7(a) financing. Up to $5M, 10-25 year terms, competitive rates. PeerSense matches franchise buyers with the right SBA lender.

Minimum 10-20% equity required. First-time or experienced franchise buyers with $50K+ liquid capital, good personal credit (680+), relevant industry experience or transferable management skills, and a business plan demonstrating the franchise's projected cash flow.

Discuss Your Franchise Deal Call (317) 452-6990

KEY TERMS

Deal Parameters at a Glance

LTV Target

80-90% (10-20% equity)

Est. Rate Range

Prime + 1.75% - 2.75% (currently ~9.25% - 10.25%)

Term

10-25 years

Recourse

Full recourse (personal guarantee)

DSCR

1.25x minimum (projected)

Closing Speed

30-60 days

Min Loan Size

$150K

Loan Products

SBA 7(a)

FIT ASSESSMENT

When Is This the Right Fit?

SBA 7(a) is the default financing vehicle for franchise acquisitions under $5M. The franchise system's brand recognition, operating playbook, and unit economics data give SBA lenders confidence to provide high-leverage financing that independent businesses rarely receive. Use SBA 7(a) when acquiring a franchise listed on the SBA Franchise Directory, when you have 10-20% equity available, and when projected cash flow supports 1.25x DSCR on the total debt service. If the franchise includes real estate (e.g., gas station, car wash, hotel), SBA 504 may provide better terms on the real estate portion. For acquisitions above $5M, conventional or private credit may be necessary.

Want the full program overview, current rate sheet, and underwriting matrix? See the SBA Loans guide →

ADVANTAGES

Key Benefits

As little as 10% equity for well-established franchise brands

Up to $5M in SBA 7(a) financing covers acquisition, build-out, and working capital

Proven franchise systems reduce lender risk perception vs independent businesses

PeerSense's database of 899+ SBA lenders identifies the best franchise lending match

Seller notes up to 10% can further reduce out-of-pocket equity requirement

ALTERNATIVES

Strategic Alternatives

SBA 504 Hotel Owner-Occupied

If you are acquiring a franchise hotel with real estate (Hampton Inn, etc.)

Learn more

SBA 7(a) to 504 Refinance

If you already hold an SBA 7(a) on a franchise and want to convert to fixed rate

Learn more

65% LTV Industrial Owner-User Financing

If the franchise acquisition includes a significant real estate component

Learn more

Frequently Asked Questions

Most SBA lenders require 10-20% equity injection for franchise acquisitions. The exact requirement depends on the franchise brand's SBA chargeoff history, the borrower's experience level, and the lender's risk appetite. Top-performing franchise brands with low SBA default rates may qualify for 10% down.

See Related Rates by Program

PeerSense covers the full commercial capital stack. Rates and structures across our money pages — updated weekly.

CMBS Conduit

5.60–7.10%

10-yr non-recourse fixed, $5M–$500M+, fully assumable

See current rates

Bridge Loans

9.00–14.00%

12–36 mo transitional, SOFR + 470-970 bps, 65-75% LTV

See current rates

DSCR Investor

5.95–8.50%

30-yr fixed rental, qualifies on property cash flow

See current rates

Equipment Financing

5.50–12.00%

Loan, lease, SBA 504, vendor, captive — Section 179 eligible

See current rates

Hotel Financing

5.85–11.75%

CMBS + SBA 504 + bridge + PIP across all flags

See current rates

Mezzanine Debt

11.00–18.00%

Subordinate to senior, $1M–$50M, capital stack fill

See current rates

Private Credit

7.80–18.00%

Non-bank flexibility, unitranche, recap, transitional

See current rates

Invoice Factoring + ABL

0.5–3.5% / 30d

B2B receivables, trucking / staffing / construction / govt

See current rates

No-Doc CRE

7.50–11.50%

Limited-doc commercial, asset-based underwriting

See current rates

Connect with PeerSense — Direct Capital Advisory

PeerSense pre-underwrites every deal before presenting it to our institutional capital sources. With 500+ lender relationships and live market rate intelligence, we match your franchise deal with the right capital source — right now.

Scan Your Deal (30 sec)Tell Us About Your Deal Call (317) 452-6990

No upfront retainer · Fee at closing only · Complimentary initial consultation

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated March 2026.

Disclaimer: The information on this page is provided for educational purposes only and does not constitute financial, legal, or investment advice. Rates, terms, and availability are subject to change based on market conditions, property characteristics, and borrower qualifications. The rate ranges cited reflect approximate market pricing as of March 2026 and may not reflect current conditions at the time of reading. PeerSense is a capital advisory firm, not a lender. We do not originate, fund, or service loans. All financing is provided by third-party lenders subject to their own underwriting criteria and approval processes. Borrowers should consult with qualified financial and legal professionals before making any financing decisions.