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Starting a franchise can be one of the fastest ways to enter the business world with a proven model. But for many aspiring owners, securing funding through an SBA (Small Business Administration) loan is the critical first step. If you’re pursuing SBA franchise financing, knowing exactly which documents you’ll need can make the difference between a smooth approval and weeks of delays.
In this guide, we’ll walk you through the full SBA franchise startup loan document checklist, explain why each piece matters, and share tips to streamline the process.
Why Documentation Matters for SBA Franchise Loans
An SBA loan, especially for a franchise startup, is typically based on financial projections rather than existing business cash flow. This makes documentation essential—lenders are taking a calculated risk on your business plan, industry data, and your personal financial stability.
While some people believe SBA loans are overly complicated, with the right lender and preparation, the process is systematic and manageable.
Personal Documentation Requirements
Your personal financial profile will be the first thing lenders review. For an SBA franchise startup loan, be prepared to provide:
- Three years of personal tax returns – Verifies your income and tax compliance.
- Current W-2 and pay stub – Confirms your current employment and income stability.
- Personal Financial Statement (SBA Form 413) – A detailed breakdown of assets, liabilities, and net worth.
- Most recent bank statement (all pages) – Shows liquidity and matches your declared assets.
- Driver’s license copy – Confirms identity.
💡 Pro Tip: Hold off on filling out certain bank-specific forms until you’ve chosen your lender. Requirements can vary between banks, credit unions, and non-bank SBA lenders.
Additional Requirements if You Own Other Businesses
If you own 20% or more of any other company, lenders will require:
- Three years of business tax returns
- Current Profit & Loss statement
- Balance sheet for the current year
This ensures lenders have a clear picture of all your financial obligations.
Franchise-Specific Documentation
For the franchise itself, you’ll need to provide:
- Business plan and resume – Show your operational strategy and relevant experience.
- Detailed sources and uses – Breaks down startup costs, franchise fees, working capital, and other expenses.
- Three years of projections – First two years must be broken down month-by-month.
- Franchise Disclosure Document (FDD) – Outlines franchise details and legal requirements.
- Signed franchise agreement – Once executed.
- Proof of franchise fee payment – Bank transaction or receipt.
Business Formation Documents
If your franchise will operate under a newly formed entity, you’ll need:
- Articles of Organization (LLC) or Incorporation
- EIN letter from the IRS
- Operating agreement or corporate bylaws
How Lenders Evaluate Your Projections
For startups, lenders focus heavily on year two projections—they expect the business to be profitable by then. They often stress test your projections by:
- Reducing projected revenue by 25%
- Increasing the interest rate by 1%
If your projections still show positive cash flow and meet debt service requirements after stress testing, your chances of approval increase significantly.
The Best Part: Building Projections Helps You Understand Your Franchise
Creating financial projections isn’t just a paperwork requirement—it’s a powerful learning tool. For example, if you’re opening a handyman franchise, you’ll calculate:
- Average ticket size per service call
- Number of calls per day per van
- Fleet growth over time
This process ensures you understand exactly how your franchise will operate and scale.
Final Thoughts
SBA franchise startup loan approval doesn’t have to be overwhelming. With the right lender and preparation, it’s a step-by-step, repeatable process. The key is organization—gather your personal, business, and franchise documents early, and be ready to back up your projections with realistic data.
If you want expert help navigating SBA franchise financing, you can book a strategy session at BookWithBeau.com.