Franchise Financing Loans

loan qualification / specifications and faqs

Q: What are the minimum and maximum loan amounts?

A: $100,000 is the minimum financing amount; there is no maximum amount.

Q: What types of lenders do you work with?

A: We work with SBA and Portfolio lenders.

Q: What are the financial requirements?

A: For SBA loans, a borrower must be able to inject at least 20% of the total project costs.

Example: For a deal with a total project cost (acquisition, working capital, inventory, soft costs, etc.) of $500,000, a borrower would need to inject $100,000.

For Portfolio loans, a borrower must be able to inject 20% of the acquisition price plus 100% of the funds for working capital, inventory, soft costs, etc.

Example: For a deal with an acquisition price of $500,000, a Portfolio lender will fund $400,000. The borrower must inject $100,000 for the acquisition and all working capital, inventory and soft cost dollars.

Q: What areas are eligible?

A: All U.S. states and territories.

Q: What types of businesses are financed?

A: We work with most franchises, including all areas of Food Service, Automotive Aftermarket, Gasoline / C Stores and most retail concepts. This includes acquisitions and new development.
We will also consider certain independent concepts.

Q: What can the loan be used for?

A: Business acquisition or development, including the purchase of fee simple real estate, and remodeling.

Q: What are the maximum repayment terms?

A: Both SBA and Portfolio lenders will generally finance an “enterprise only” loan for a ten year term. If fee simple real estate is included in the purchase, SBA lenders will usually extend the term to twenty years and Portfolio lenders will extend to fifteen years. Remodeling financing is generally for a term of up to seven years.

Q: What are the interest rates?

A: SBA lenders will charge between 2.00 and 2.25% over the Prime interest rate as published in The Wall Street Journal. This is a variable rate product that adjusts quarterly.
Portfolio lenders typically offer both fixed and variable rate products. The fixed interest rate is tied into the U.S. Treasury rates and the variable rate is tied into the LIBOR.

Q: What are the lender’s fees and costs?

A: The SBA charges a “guaranty fee” which is a percentage of the loan amount ranging between 1.7% and 2.6% depending on the loan size. Portfolio lenders usually charge a “point” which is 1% of the loan amount.

Borrowers must also anticipate paying for all expenses associated with the loan approval including, but not limited to such items as the lender’s attorney, application fees, searches, appraisals, credit reports, environmental reports, etc.