As you explore franchise opportunities, funding is likely top of mind. Understanding your financing options early can help you move forward with confidence, so I wanted to share some of the most common methods franchise owners have used in recent years.

Popular Franchise Funding Options Include:

401(k) Rollovers (ROBS – Rollovers as Business Startups)

This strategy allows you to use retirement funds to invest in your business—tax- and penalty-free. Many entrepreneurs use this method to finance 100% of their startup or meet cash requirements for SBA or other loans. Benefits include:

✅ No debt = faster path to profitability

✅ Ability to pay yourself a salary immediately

✅ Covers incorporation, tax reporting, and legal compliance (typically ~$5,000 in setup costs)

SBA Loans

The Small Business Administration (SBA) guarantees up to 90% of loans, making them attractive to lenders. SBA loans offer:

🔹 Loan amounts from $50,000 to $5M

🔹 Competitive interest rates (currently prime + 2.75%)

🔹 Borrowers must provide 20-30% of cash for the business start up cost

One key advantage is SBA Approved Franchises, which have already been vetted by the SBA, making the approval process smoother and often faster. If you're considering an SBA loan, choosing an SBA-approved franchise could be a strategic advantage.

Approval depends on factors like credit score, collateral, and cash investment, with funding typically taking 90–100 days.

Securities-Backed Lines of Credit (SBLOCs)

If you have a stock portfolio or other market investments, you may be able to use them as collateral for a Securities-Backed Line of Credit (SBLOC). This method allows you to borrow against your investments without selling them, meaning your portfolio can continue growing while you access funds for your franchise. Benefits include:

📈 Typically lower interest rates than traditional loans

📈 No credit check required—approval is based on your portfolio value

📈 Fast access to capital (often within days)

Keep in mind that because your investments serve as collateral, market fluctuations could impact your borrowing capacity.

Home Equity Lines of Credit (HELOC)

For those who qualify, a HELOC can provide low-cost financing, things to consider include:

🏡 Debt to income ratio

🏡 Verifiable income required

🏡 Funding timelines of 30–60 days