Franchises

Does buying an existing franchise qualify for an SBA loan?

min read
Opinions expressed by Entrepreneur contributors are their own.
Yes--buying an existing franchise business is a transaction that falls within the acceptable parameters of SBA loans, but that's not saying you will be able to get one.

SBA loans can cover financing for a business purchase and they can also cover the financing of working capital reserves. You'll still have to meet all of the qualification standards--both personal and business--before you can get a loan and you'll have to find a bank willing to lend. Though the latter has not been a problem until the past year or so, it is definitely an issue in today's very tight small business credit market.

The best approach is to contact the franchisor first to determine their experience with SBA loans and whether they are registered for expedited service with the SBA.

Second, contact your local bank(s) to determine if they are processing SBA loans.

Finally, find out if the seller is willing to carry paper for part or all of the purchase. Even if the interest rate is a bit higher, this approach may end up being easier and cheaper than going through the hassles and fees involved with an SBA loan.

More from Entrepreneur

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.