Securing financing for a large franchise acquisition that includes real estate and a full buildout can often seem like an impossible task for many entrepreneurs. However, with the right strategy, expert guidance, and a thorough understanding of SBA loan programs, deals that seem out of reach become achievable. In this article, we dive deep into one of the most complex and impressive wins recently achieved—a $6.22 million SBA 504 loan approval that funded a franchise purchase, included real estate acquisition, and covered the entire buildout process.

As a business ownership coach and lending expert with over 20 years in the SBA lending industry, I’ll walk you through how this deal was structured, the hurdles we overcame, and the crucial lessons for anyone looking to finance a franchise with real estate. Whether you’re a seasoned entrepreneur or just starting your business acquisition journey, this breakdown will provide valuable insights on navigating SBA financing for complex deals.

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How the Client Found Me and Why Local Banks Often Fall Short

One of the most interesting parts of this deal is how the borrower actually found me—through YouTube. This is a great example of how sharing relevant content online can connect you with borrowers who need expert help navigating complicated SBA loan situations. Many entrepreneurs start their journey by approaching local banks, assuming that existing banking relationships will make the process easier. However, as we saw with this client, that’s not always the case.

The borrower initially applied to a local bank but was pushed back because the plan involved buying an existing building and adding two stories on top. The top story was intended to be a condo for his personal residence. The local lender declined the loan, citing concerns about this mixed-use approach.

Luckily, as an SBA loan broker and consultant, I was able to navigate those restrictions and find a lender comfortable with the structure. This is a key takeaway: sometimes local banks don’t have the expertise or flexibility to handle complex deals, especially those involving construction or mixed-use real estate within SBA guidelines.

Structuring the Deal: Franchise, Real Estate, and Full Buildout

This deal was a perfect example of how SBA 504 loans can be used to finance not only a franchise purchase but also the real estate and buildout costs associated with the business. SBA 504 loans are designed to support small businesses with fixed assets financing, and they can cover land, buildings, and construction costs.

In this case, the borrower needed financing for an existing building purchase plus an addition of two stories. Because construction loans require approved plans and permits, the borrower first secured a short-term bridge loan to acquire the property and allow enough time for the approval process. Once the plans were approved, the SBA 504 loan could be finalized to take out the bridge loan and fund the construction and franchise acquisition.

This approach allowed the borrower to be “shovel ready” with permits and plans in place before closing on the SBA loan, which is a critical requirement for construction financing. Some banks even act as bridge lenders themselves, making it easier to transition into the SBA loan once approvals are secured.

Overcoming Hurdles: Square Footage, Eligibility, and SBA Guidelines

Every complex loan deal comes with its own set of challenges. For this SBA 504 loan, one significant hurdle was negotiating the square footage requirements related to the new construction. SBA guidelines stipulate that for new construction projects, the business must occupy at least 60% of the total square footage. In contrast, if you’re buying an existing business, the occupancy requirement drops to 51%.

Since this deal involved a large addition treated as new construction, we had to “finagle” the plans a bit to meet the 60% occupancy benchmark. This negotiation ensured compliance with SBA rules and helped the loan move forward without delays. Another challenge was that the borrower was a relatively young entrepreneur with limited cash reserves. However, because the deal made sense overall and was well-structured, we were still able to secure funding.

It’s also worth noting that SBA 504 loans can be used for deals ranging from $125,000 up to $20 million, so the $6.22 million loan fits comfortably within the program’s limits and demonstrates how flexible and scalable SBA financing can be.

Why Franchises and Real Estate Make SBA Loans More Appealing

Lenders often prefer franchise deals because franchises come with an established business model and proven track record. In this case, the franchise had 200 to 300 successful locations, which gave lenders confidence in the business’s viability.

Adding real estate into the financing package also provides tangible security for the lender. The SBA 504 loan includes a senior lien on the brick-and-mortar property, which reduces risk. Some banks even specialize in real estate deals, so combining franchise financing with real estate acquisition creates a very appealing package for underwriters.

This combination of franchise stability and real estate collateral made the deal much easier to finance despite the complexity involved in construction and buildout.

How I Position Deals to Get Them Approved

My approach as an SBA loan broker focuses heavily on the upfront work. I consider my job to be finding the right lender and structuring the deal so that it’s positioned to get approved. Once the loan is in the hands of a business development officer (BDO) at the bank, they handle the underwriting and processing towards closing.

Ideally, we don’t need to communicate much after the initial stages because everything is running smoothly. The BDOs I work with specialize exclusively in SBA loans and are highly motivated to close deals—they typically earn commissions based on production, so everyone involved has aligned incentives to get the loan approved.

By doing the heavy lifting early—assessing eligibility, navigating SBA guidelines, and finding the best terms—I ensure the borrower gets the best possible loan with minimal red tape.

Advice for Entrepreneurs Considering Franchise Purchases with Buildouts or Land

If you’re thinking about buying a franchise that involves real estate or a significant buildout, my best advice is to start by consulting with an expert who truly understands SBA financing. Don’t just assume your local bank will offer the best deal or have the expertise to handle complex SBA 504 loans.

Even if you already have a deal on the table, it’s worth running it by a broker or consultant who can provide an objective assessment. Sometimes you’re already in good hands, and other times there are better options available.

My role is to connect you with the right lenders, help you prepare your business plan, and guide you through the SBA underwriting requirements. This clarity often makes the difference between a loan that gets approved and one that stalls indefinitely.

What Lenders Want to See in a Projection-Based SBA Loan

For loans based on future projections, lenders want to see a proven business model with demonstrated success. Franchises fit this criterion well because they come with established systems and multiple successful locations.

Additionally, having real estate involved gives lenders tangible collateral, which reduces risk. The SBA 504 program’s structure, with a senior lien on the property, makes it particularly attractive for banks specializing in real estate financing.

Ultimately, lenders want assurance that the business will generate sufficient cash flow to cover loan payments. A combination of franchise history, a solid business plan, and real estate security checks all these boxes.

How to Get in Touch and Explore Your SBA Financing Options

If you’re ready to explore SBA loan options for your franchise acquisition or business purchase, the first step is to schedule a conversation with an expert who can guide you through the process. I invite you to visit bookwithbo.com to book a free discovery call where we’ll review your deal, discuss eligibility, and map out a clear path toward financing.

Whether you already have a deal or are just starting out, this consultation can save you time, reduce frustration, and increase your chances of securing the best terms possible. I’m committed to helping entrepreneurs like you navigate the complexities of SBA loans so you can focus on growing your business.

Conclusion: Engineering Big Deals with the Right Plan and Partners

Deals like this $6.22 million SBA 504 loan for a franchise with real estate and full buildout don’t just happen by chance. They require careful engineering, expert navigation of SBA guidelines, and collaboration with the right lenders and brokers. From securing short-term bridge loans to negotiating square footage requirements and presenting a rock-solid business plan, every step matters.

If you’re considering a franchise purchase that includes real estate or significant buildout costs, don’t go it alone. Work with experts who understand the SBA loan landscape and can position your deal for success. The right plan, the right partners, and the right presentation to lenders can turn your business ownership dream into reality.

Remember, you don’t have to settle for the first bank that says no. With the right guidance, you can find funding solutions tailored to your unique business goals.

For more insights on SBA financing, franchise ownership, and business acquisition strategies, be sure to subscribe and stay connected. Your journey to successful business ownership starts with informed decisions and the right support.