Hi, I’m Beau Eckstein. As a Business Ownership Coach | Investor Financing Podcast host and a lender with over 20 years in the industry, I often get asked: what are the specific requirements to qualify for an SBA loan when investing in a franchise, and how can you make sure your franchise meets the criteria?

In this article I’ll walk you through a practical, step-by-step approach I use with clients to determine eligibility, prepare documentation, and match you with the bank that best fits your objectives. Whether you’re buying a 300-unit national brand or an emerging franchise with zero units, this is the guide I use when advising candidates for SBA financing as a Business Ownership Coach | Investor Financing Podcast host.

Is the Franchise SBA-Eligible?

The first thing we do is check the SBA Franchise Directory. The SBA keeps a directory and guidance on franchise relationships that may affect loan eligibility. If the franchise is listed there as an approved relationship, you’re off to a great start. If it’s not listed, don’t panic — there are additional steps.

If the franchise is large and established (think hundreds of units), it’s generally going to be SBA-eligible. Many franchise development representatives know whether their system is SBA-friendly and will tell you during the discovery process. For emerging brands that have few or no units, approval becomes more of a case-by-case conversation with banks that specialize in startups.

How I Verify Franchise Documentation

Next, I request a copy of the Franchise Disclosure Document (FDD) if I don’t already have it. The FDD tells us critical pieces of information: how many units exist, the level of franchisor support, territorial rights, fees, and any special clauses that lenders will scrutinize.

When a brand has few or no existing units, I treat it as an emerging franchise and reach out to multiple banks I work with who specialize in franchise startups. The FDD and unit count help me determine whether the business model and franchisor relationship will pass lender underwriting.

Working With Banks: It’s Often Case-by-Case

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There’s no one-size-fits-all bank for franchise financing. Each bank has different risk appetites and product features. For example, I have relationships with banks that offer:

• 90% financing on a startup (for select scenarios)
• Lower rates but only 70% financing on startups
• ~80% financing plus an equity line
• Interest-only periods to help cash flow during ramp-up

Because of this variety, qualifying an SBA loan often comes down to matching the borrower’s profile and the franchise characteristics to the right lender. That’s why a consultative approach is essential. As a Business Ownership Coach | Investor Financing Podcast advisor, I help clients understand which bank’s product aligns with their goals.

Common SBA Loan Requirements for Franchise Buyers

Here are the typical requirements you’ll encounter when applying for an SBA loan to buy a franchise:

• Eligible business type — the franchise must be an acceptable SBA business (most traditional franchised businesses are).
• Credit score — lenders typically look for a credit score of about 680 or better.
• Debt-to-income and outside income — you should have sufficient outside income to support any outside debt and living expenses while ramping up the business.
• Low personal debt — lenders prefer borrowers without heavy personal liabilities.
• Location and residency — buying a franchise in the vicinity of where you reside is commonly preferred.

If you can check these boxes, and the franchise is an eligible business type, you can usually find a way to fund the deal one way or another.

Startups vs. Established Franchises — Different Paths

Investing in a well-established franchise with hundreds of units generally simplifies the underwriting process. Many banks are comfortable with proven systems and will provide standard SBA financing.

With emerging franchises, the process is more nuanced. I’ll have conversations with several banks that specialize in franchise startups to determine whether one of their product offerings will work. In some instances, underwriting becomes a tailored decision based on the FDD, unit growth plan, and franchisee support commitments.

Preparing Your Personal Profile for Pre-Qualification

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Before I match you with a lender, I ask some basic pre-qualifying questions to streamline the process:

1. Your credit score (aim for 680+).
2. Current debt obligations and monthly payments.
3. Whether you’ll keep your W-2 job during ramp-up.
4. Where you intend to buy and whether it’s near where you live.

These simple data points help me determine which bank and loan product make sense. If you have strong credit and outside income that supports existing debt, your path to SBA approval becomes much smoother.

How I Work With Clients — My Process

I start with a conversation about the specific franchise you’re interested in, your objectives, and your financial profile. From there I:

• Confirm franchise eligibility via the SBA directory or FDD.
• Identify which banks are best suited for your situation.
• Explain available financing structures (percent financed, equity lines, interest-only periods).
• Help you assemble the documentation required for underwriting.

My goal is to find the path that minimizes risk and maximizes your chance of approval. If you want a customized discussion, you can book time through my site and we’ll dive into specifics.

Realistic Expectations and Timelines

SBA loans usually take longer than conventional financing because of the government guarantee and documentation required. Typical timelines can vary depending on the bank and the complexity of the deal, but expect a process that includes pre-qualification, lender selection, underwriting, and closing.

Working with a trusted advisor who knows lender preferences can reduce surprises and accelerate decision-making.

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Recap: What You Need to Qualify

Here’s a quick recap of the essentials:

• Confirm the franchise is SBA-eligible (SBA directory or FDD)
• Have a credit score of roughly 680+ and manageable personal debt
• Show outside income that supports debt and living expenses
• Work with a bank whose products match your objectives
• Be prepared for varying financing percentages depending on the bank

If all of these line up, you have a strong chance to secure SBA funding for your franchise purchase.

Next Steps — How I Can Help You Move Forward

If you’re ready to get serious about acquiring a franchise, start by booking a short consult with me. We’ll review the franchise, your financial profile, and then I’ll match you with the banks most likely to approve your deal.

For buyers who prefer to search resale opportunities, visit franchiseresalelistings.com where we perform customized searches and send new listings weekly. If you want a tailored financing strategy, book a call at bookwithbeau.com and we’ll begin the qualification process together as I guide you through each step as your Business Ownership Coach | Investor Financing Podcast advisor.

Final Thoughts

Qualifying for an SBA loan when buying a franchise is an entirely achievable goal with the right preparation and bank selection. Start by confirming eligibility, preparing your personal financial profile, and engaging with lenders who understand franchise risk. If you want help navigating the process, I’m here to help as a Business Ownership Coach | Investor Financing Podcast mentor and advisor.

Book a call, join the newsletter, or reach out and let’s see if your franchise opportunity fits SBA underwriting. I look forward to helping you turn your franchise dreams into fundable reality as your Business Ownership Coach | Investor Financing Podcast partner.