SBA Loan for a Franchise: What It Takes to Qualify

The number that governs an SBA loan for a franchise is 10%. That is the minimum equity injection the U.S. Small Business Administration requires on a start-up business under SOP 50 10 8, effective June 1, 2025, and it is measured against total project cost rather than the franchise fee alone. The rest of the file is the lender testing whether you can carry the other 90%: your credit, your collateral, your management record, and projections a credit committee can defend.

Franchise buyers coming out of a corporate career tend to arrive with the equity and the resume already in place. What trips them up is sequencing. Financing has its own clock, its own paperwork, and its own gatekeepers, and the buyers who close cleanly start that clock early instead of waiting until a franchisor hands them an agreement.

Which SBA loan program fits a franchise purchase?

For almost every franchise purchase, the answer is SBA 7(a). It is the general-purpose program, it can fund the franchise fee, vehicles, build-out, and operating cash in a single facility, and it carries a maximum loan amount of $5 million. The 504 program is a real estate and heavy equipment tool, so it only enters the picture when you are buying a building.

Lenders are not interchangeable here. A bank that closes dozens of franchise loans a year knows the brand paperwork and moves faster than a local bank writing its first one, so ask any lender how many franchise files they have funded before you hand over a tax return.

How much cash do you need to put in yourself?

At least 10% of total project cost, and that phrase matters. The SBA defines total project cost as all costs required to become operational, so the 10% is calculated against the full opening budget, not against the franchise fee. A start-up, for SBA purposes, is a business that has been generating revenue from its intended operations for one year or less, which is where a brand-new franchise territory lands.

The equity injection has to be documented and traceable. Cash from savings is simplest. Home equity works. Retirement money can work through a rollover structure, which comes with its own compliance obligations and is worth understanding before you commit to it (we walked through the mechanics in our guide to using a 401(k) to buy a business). A seller note counts toward the injection only on full standby for the life of the loan, and only up to the limits SOP 50 10 8 sets, so it is rarely the whole answer.

Plan above the floor. The 10% is the SBA minimum, not the lender’s appetite, and individual banks set their own bar higher depending on the deal and the borrower.

What does the SBA Franchise Directory do for your application?

It settles the affiliation question before your file reaches underwriting. When a brand appears in the SBA Franchise Directory, the lender does not have to review the franchise agreement itself to decide whether the franchisor exercises enough control to make the business ineligible. That review is slow, it is inconsistent between banks, and it is where franchise loan files stalled after the SBA retired the directory in 2023.

The directory came back on June 1, 2025 under SOP 50 10 8. For a buyer, that turns into one concrete question to ask a franchise development team early: is the brand currently listed. A yes removes a step from your loan file. A no is not automatically fatal, but it puts the affiliation analysis back on your lender and you should know that before you are 60 days into an application.

What do SBA lenders actually underwrite?

Five things, in roughly this order: your character and credit, your money in the deal, your ability to run this specific business, the collateral available, and whether the projected cash flow services the debt with room left over.

That last column is the part worth preparing. Projections assembled from the franchisor’s disclosed financial performance representation, with your own market’s costs plugged in, read very differently to a credit committee than a spreadsheet built backward from the payment you want. Reading the disclosure closely is the same work described in our walkthrough of franchise due diligence, and it pays twice: once with the franchisor, once with the bank.

How long does SBA approval take?

Longer than most buyers plan for, and the timeline is stage-based rather than fixed. Prequalification is quick. A complete application package, lender credit approval, SBA authorization where the lender is not operating under delegated authority, and closing each add time, and every incomplete document resets the clock on the stage you are in.

The practical move is to run financing in parallel with the franchisor’s award process instead of after it. Get prequalified before discovery day, so that when a territory and an agreement are in front of you the money question is already most of the way answered. The full opening timeline shows where financing sits against training, site work, and launch.

What would an SBA loan cover for a College Hunks Hauling Junk® franchise?

The loan is sized to the total initial investment, not to the franchise fee, and the figures below come from the 2026 Franchise Disclosure Document as amended August 26, 2026.

Two details help an SBA file here. Running both concepts, junk removal and College Hunks Moving®, puts two revenue lines behind one debt payment, which is the kind of structure credit committees like. And the model is owner-operator by design, which lines up with the SBA’s own expectation that the borrower is actively running the business rather than watching it. Veterans with 51% or more ownership take $7,500 off the fee across both concepts, $3,750 per concept, and the veteran financing path covers how that stacks with VetFran.

For the line-by-line version of what sits inside those ranges, see the full investment breakdown, and our financing overview covers the options beyond SBA lending.

Where to take it from here

If you are weighing whether a College Hunks Hauling Junk® franchise fits your goals, talk to our Franchise Development team and see if your market is still open. We read every inquiry and there is no pressure, just answers. Bring your financing questions with you. We would rather help you pressure-test the numbers now than have you discover a gap halfway through an application.

Financial information shared in this content is drawn from Item 19 of the 2026 CHHJ Franchising, L.L.C. Franchise Disclosure Document (Issuance Date: April 30, 2026, as amended August 26, 2026). See Item 19 for material assumptions, the underlying data set, and full required disclosures. Past performance does not guarantee future results. New franchisees may earn less.

This information is not an offer to sell or solicitation to buy a franchise. A franchise offering can only be made through the delivery of a Franchise Disclosure Document. Certain states regulate the offer and sale of franchises; if you are a resident of one of these states, we will not offer you a franchise unless we have complied with applicable pre-sale registration and disclosure requirements in your state.

College Hunks Hauling Junk®, College Hunks Moving®, and the H.U.N.K.S logo are registered trademarks of CHHJ Franchising, L.L.C. © 2026 CHHJ Franchising, L.L.C. All rights reserved.