Franchise Glossary
SBA Loan (Small Business Administration)
What is SBA Loan (Small Business Administration) in franchising?
A federally backed loan program used to finance franchise purchases when no cleaner funding path covers the full capital need. The SBA 7(a) program is the most widely used in franchising, allowing borrowers to finance up to 90% of the total project cost. It is also the most demanding path available: it requires a credit score above 680, collateral, a personal guarantee, and a full documentation package including 2–3 years of personal tax returns, a business plan, and financial projections. The underwriting process typically takes 60 to 90 days, often longer. For buyers who have liquid savings, home equity, or retirement funds available, those options should be explored first. SBA is valuable as a last resort, for when the capital need genuinely exceeds what those paths can cover.