I'm about to get involved in a franchise and plan to open a store for about $200k. I'm leaning towards a commercial loan so that I can build commercial credit and so that I can save my home equity as a last resort instead of first resort since I plan to open a few more stores in as many years. My question is...which banks tend to be more "friendly" to first time franchisees? In other words, am I more likely to get approval from a local bank or from one of the big banks? I know there are a lot of factors to consider (the 3 Cs), but I'm just wondering if there's a rule of thumb on which types of banks tend to be the most lenient for first time franchisees.

Thanks in advance.

I could be wrong but when I tried to get a loan I found that the local banks were no help at all they wanted established business - but good luck anyways you may ahave to find alternative means.

I agree, local banks are looking for some security and stability in the business. I would contact the franchisor sometimes they finance the purchase or they have set up and are approve with the Small Business Administration, I would check out their site.

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Here is the link to the small business administration they have a list of approved lenders:

Small Business Administration -

I hope that helps!

Franchises rarely provide funding. They may help you obtain funding by steering to lenders that have worked with their franchisees, but that is no guarantee that you would be funded. You would still need to qualify.

The SBA guarantees loans. They don't actually fund loans. Additionally, they have a list of franchises that have been "pre-approved" for expidited processing. That does not mean that if you buy into one of those franchises you are automatically approved for an SBA loan. It simply means that those franchises have gone through a pre-qualification check. Again, the franchisee would still need to qualify for the loan.

To be considered for an SBA loan you must come to the table with 20 - 30% of your own cash and prove applicable experience in the industry you are going into. And of course you must be prepared with a completed business plan.

Your first order of business should be your business plan. See below for help with that and more info on funding sources.

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Thanks BizDev that was helpful information