Based on analysis of 192 franchises in FranchiseStack's database, SBA financing is a primary funding vehicle for mid-to-high investment brands. While low-cost entries like Jan-Pro ($4K-$56K) may utilize microloans, capital-intensive brands such as Burger King ($580K-$4.7M) and McDonald's ($1.3M-$2.3M) frequently rely on SBA 7(a) loans to bridge the gap between liquid capital and total project costs. FranchiseStack data reveals that royalty structures, ranging from 0% at RE/MAX to 8% at Subway, significantly impact the debt service coverage ratios (DSCR) required for SBA approval.
The SBA Franchise Directory is a list of franchise brands that have been vetted by the SBA to ensure their franchise agreements meet SBA eligibility requirements regarding affiliation and control.
Most SBA lenders require a minimum equity injection of 10%, though 20% is common for new franchisees or brands with higher risk profiles.
Yes, SBA loans can be used for home-based franchises like Jan-Pro or eXp Realty, provided the business meets standard SBA size and eligibility standards.
The 7(a) loan is flexible and used for working capital and equipment, while the 504 loan is specifically designed for fixed assets like real estate and long-term machinery.
Yes, high royalty fees, such as the 12% at Jackson Hewitt or 8% at Subway, reduce the net cash flow available to service debt, which lenders scrutinize during the underwriting process.
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