SBA Loan Requirements for Franchises
The SBA 7(a) loan is how most franchise buyers get funded. Up to $5 million, 10-25 year terms, and 10-20% down. Your franchise has to be on the SBA Franchise Directory. Most big brands are. The catch: you'll need a 680+ credit score, a solid business plan, and a personal guarantee.
Source: SBA.gov, SBA lending statistics FY2025. State volume = total SBA 7(a) loans approved.
SBA 7(a) Franchise Loan Requirements
Franchise on SBA Directory
The SBA maintains a Franchise Directory of pre-approved brands. If your franchise isn't listed, the lender has to submit the FDD for review. Most top 200 franchises are already there.
10-20% equity injection
Cash, unencumbered assets, or a 401(k) rollover (ROBS). Can't be borrowed. Some lenders accept seller financing for up to 5% of the total project cost.
Personal guarantee
All owners with 20%+ stake sign a personal guarantee. Your personal assets are on the line if the franchise fails.
Business plan + projections
Lenders want 3-5 year financial projections. Use Item 19 (Financial Performance Representations) from the FDD if available. Not all franchisors disclose Item 19.
680+ credit score
Some lenders go as low as 650 with strong collateral. Below 650, you're looking at 6-12 months of credit repair before a realistic SBA application.
SBA vs Other Franchise Financing (2026 Rates)
| Financing type | Rate range | Max term | Down payment | Best for |
|---|---|---|---|---|
| SBA 7(a) | 9.0-10.25% | 25 years | 10-20% | Most franchise purchases |
| SBA 504 | 6.5-7.5% | 25 years | 10% | Real estate + equipment only |
| Conventional bank | 8-13% | 10 years | 20-30% | Strong credit, fast close |
| ROBS (401k rollover) | 0% | N/A | 100% (your money) | Large retirement accounts |
| Seller financing | 6-10% | 5-7 years | 10-30% | Resale/existing units |
SBA Franchise Lending by State
Click any state for SBA lender info, requirements, and how to apply locally
| State | SBA 7(a) loans (2025) | Avg loan amount | Top SBA lender |
|---|---|---|---|
| Alabama | 1,842 | $312,000 | Regions Bank |
| Alaska | 287 | $298,000 | Northrim Bank |
| Arizona | 3,156 | $345,000 | Stearns Bank |
| Arkansas | 1,124 | $278,000 | Arvest Bank |
| California | 12,840 | $425,000 | Live Oak Bank |
| Colorado | 3,478 | $368,000 | Live Oak Bank |
| Connecticut | 1,756 | $380,000 | Webster Bank |
| Delaware | 512 | $335,000 | WSFS Bank |
| District of Columbia | 624 | $410,000 | Live Oak Bank |
| Florida | 9,875 | $365,000 | Live Oak Bank |
| Georgia | 4,320 | $342,000 | Live Oak Bank |
| Hawaii | 685 | $310,000 | First Hawaiian Bank |
| Idaho | 978 | $305,000 | Zions Bancorporation |
| Illinois | 5,210 | $358,000 | Live Oak Bank |
| Indiana | 2,645 | $318,000 | Centier Bank |
| Iowa | 1,520 | $295,000 | Hills Bank and Trust |
| Kansas | 1,380 | $302,000 | Capitol Federal Savings |
| Kentucky | 1,690 | $308,000 | Republic Bank |
| Louisiana | 1,856 | $315,000 | Business First Bancshares |
| Maine | 645 | $285,000 | Bangor Savings Bank |
| Maryland | 2,540 | $362,000 | Live Oak Bank |
| Massachusetts | 3,180 | $395,000 | Eastern Bank |
| Michigan | 3,890 | $328,000 | Huntington National Bank |
| Minnesota | 2,870 | $340,000 | Bremer Bank |
| Mississippi | 985 | $275,000 | BancorpSouth |
| Missouri | 2,680 | $325,000 | Enterprise Bank & Trust |
| Montana | 568 | $290,000 | Glacier Bancgroup |
| Nebraska | 1,120 | $298,000 | First National Bank of Omaha |
| Nevada | 1,645 | $355,000 | Nevada State Bank |
| New Hampshire | 712 | $310,000 | Mascoma Savings Bank |
| New Jersey | 4,120 | $382,000 | Live Oak Bank |
| New Mexico | 756 | $288,000 | New Mexico Bank & Trust |
| New York | 7,650 | $405,000 | Live Oak Bank |
| North Carolina | 4,580 | $338,000 | Live Oak Bank |
| North Dakota | 412 | $282,000 | Gate City Bank |
| Ohio | 4,210 | $332,000 | Huntington National Bank |
| Oklahoma | 1,540 | $305,000 | Valliance Bank |
| Oregon | 2,180 | $345,000 | Umpqua Bank |
| Pennsylvania | 4,890 | $348,000 | Live Oak Bank |
| Rhode Island | 542 | $325,000 | Centreville Bank |
| South Carolina | 2,110 | $318,000 | Live Oak Bank |
| South Dakota | 465 | $285,000 | Great Western Bank |
| Tennessee | 3,240 | $335,000 | Pinnacle Financial Partners |
| Texas | 11,240 | $378,000 | Live Oak Bank |
| Utah | 2,015 | $340,000 | Zions Bancorporation |
| Vermont | 348 | $278,000 | Community National Bank |
| Virginia | 3,870 | $358,000 | Live Oak Bank |
| Washington | 3,560 | $372,000 | Live Oak Bank |
| West Virginia | 520 | $268,000 | City National Bank of WV |
| Wisconsin | 2,680 | $322,000 | Bmo Harris Bank |
| Wyoming | 312 | $275,000 | First Interstate Bank |
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