What are the franchise business loan requirements?

In order to obtain a franchise business loan, you must meet both the franchiser's and the lender's requirements. These may include the following:

  • personal capital to provide a down payment of 30 percent or more, depending on the franchiser's requirements;
  • a high personal credit score, typically over 720 or higher; and
  • experience as an owner or manager of a similar business.

Ultimately, the franchiser will want to be sure that you have the financial resources to repay any business loan you obtain to purchase the franchise. The lender, similarly, wants to eliminate the risk that you will default on the loan. This risk is reduced by showing you have financial resources in case of an emergency, you have a good history of repaying debts and you have a high potential to run a successful business.