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Franchise ownership can be one of the fastest paths to business success — but only if you’re properly funded. For many aspiring owners, the SBA 7(a) loan is the ideal tool to finance their franchise journey. But how exactly does it work? And what can it really cover?
Let’s break it down.
What Is an SBA 7(a) Loan?
The SBA 7(a) loan program is the most popular small business loan offered by the Small Business Administration. It’s designed to help entrepreneurs access funding with favorable terms and lower down payments — especially helpful for first-time franchise owners.
According to Beau Eckstein, SBA lending expert, the 7(a) loan allows borrowers to fund 80% to 90% of their total project cost.
What Does the SBA 7(a) Loan Cover for Franchisees?
When applying for SBA financing, the bank isn’t just looking at the franchise fee. They’re evaluating your entire project cost, which typically includes:
- Franchise fee
- Working capital
- Equipment
- Build-out and leases
- Software and marketing
- Employee salaries
- Insurance, legal, and other startup costs
The goal? To make sure you're fully capitalized — not just getting through the door, but staying afloat and scaling up.
Why Working Capital Can Make or Break You
One of the biggest mistakes new franchisees make is underestimating the ramp-up time. Many franchises don’t cash flow immediately — some take 6, 9, or even 12 months to reach break-even.
Yet, when you review a Franchise Disclosure Document (FDD), particularly Item 7, you’ll often see just three months of working capital built into the estimates. That’s rarely enough.
“Most businesses fail because they’re undercapitalized,” Beau warns.
“If you only plan for three months, but it takes nine to cash flow, you’re going to feel the strain.”
This is why Beau and his team work with clients to right-size their loan and include realistic working capital. It reduces stress and improves the likelihood of long-term success.
How Much Do You Need to Put Down?
The SBA 7(a) loan typically requires an equity injection of 10% to 20% of the total project cost. If your project cost is $200,000, expect to bring $20,000 to $40,000 to the table.
Having good credit, a solid resume, and outside W2 income will strengthen your application and may even make the loan process easier.
Why You Should Work with an SBA Loan Expert
There are nuances to every franchise and every bank. Some lenders require a minimum FranData score, others don’t. Some will approve lower-credit borrowers if the deal is strong. Others want extra experience.
Navigating all this on your own? Risky. Working with a broker like Beau Eckstein ensures your deal is properly packaged, matched to the right lender, and structured to maximize success.
Ready to Finance Your Franchise?
If you’re exploring franchise ownership and want to understand how the SBA 7(a) loan fits your goals:
👉 Book a free call with Beau at bookwithbeau.com
Beau and his team will walk you through your financing options and help you craft a capital strategy tailored to your needs.
Bonus: Scale Smarter with Virtual Assistants & AI
Looking to grow your business lean? Beau has also created a free ebook showing how to 10x your productivity using virtual assistants and AI tools.
🎯 Get your free copy at bizscalingplaybook.com
Final Thoughts
The SBA 7(a) loan is one of the most flexible and accessible ways to launch your franchise business. But to make it work, you need to fund the right amount, understand your ramp-up period, and get expert guidance.
Don’t just wing it. Build a franchise that’s built to last — and get funded the smart way.