Complete financing solutions for ground-up franchise construction. From land acquisition to equipment installation - we finance every aspect of your new franchise build.
Calculate total project costs and financing needs for your new franchise construction
Calculate total project costs and financing needs for your new franchise construction
Land purchase, site prep, utilities, parking
Foundation, framing, roofing, HVAC, plumbing, electrical
Kitchen equipment, POS systems, specialized equipment
Furniture, fixtures, signage, decor
Permits, professional fees, training, working capital
Recommended 10-15% for cost overruns
Connect with construction financing specialists who understand franchise development and can help structure the right financing solution for your ground-up build project.
Structure: Single loan that converts from construction to permanent financing
Benefits: One closing, streamlined process, rate lock protection
Interest Rate: 9.5% - 12% (permanent phase)
Term: 15-25 years permanent
Down Payment: 20-25%
Best for: First-time builders, streamlined process
Structure: Short-term construction loan, then separate permanent financing
Benefits: Flexibility, potentially lower rates, shop for permanent loan
Interest Rate: Prime + 1-3% (construction), then permanent rates
Term: 12-18 months construction
Down Payment: 15-20%
Best for: Experienced builders, rate shopping
Structure: SBA 504 program for owner-occupied new construction
Benefits: Low down payment, long-term fixed rates, favorable terms
Interest Rate: 9.5% - 11% (SBA portion)
Term: 20-25 years
Down Payment: 10-15%
Best for: Owner-occupied, long-term ownership
Structure: Short-term financing to bridge funding gaps during construction
Benefits: Quick funding, flexible terms, covers immediate needs
Interest Rate: 12% - 18%
Term: 6-24 months
Down Payment: Varies
Best for: Funding gaps, quick closings
Structure: Lenders specializing in franchise construction financing
Benefits: Franchise expertise, streamlined approval, brand knowledge
Interest Rate: 10% - 14%
Term: 15-20 years
Down Payment: 15-25%
Best for: Proven franchise brands
Structure: Traditional commercial mortgage with construction component
Benefits: Competitive rates, established lending programs
Interest Rate: 9.5% - 13%
Term: 15-25 years
Down Payment: 20-30%
Best for: Strong credit, established businesses
Down payment requirements typically range from 15-25% of total project costs. SBA 504 loans may require as little as 10-15%, while conventional construction loans usually require 20-25%. The exact amount depends on your credit score, franchise brand, project size, and lender requirements. Strong franchisees with excellent credit may qualify for lower down payments.
Construction-to-permanent loans combine construction financing and permanent financing into one loan with a single closing, offering rate protection and streamlined processing. Traditional construction loans are short-term (12-18 months) and require a separate permanent loan upon completion. Construction-to-permanent is simpler but may have higher rates, while traditional offers more flexibility to shop for permanent financing.
New build financing approval typically takes 4-8 weeks, depending on loan complexity and lender requirements. The process includes business plan review, site approval, construction plan evaluation, and financial underwriting. SBA loans may take 8-12 weeks due to additional approval layers. Having complete documentation, approved site plans, and franchisor approval can expedite the process significantly.
Most lenders require 15-25% down payment, so 100% financing is rare for new construction. However, some programs like SBA 504 loans may finance up to 85-90% of project costs. Alternative options include using business equity loans, combining multiple financing sources, or seller financing for land acquisition. Having some personal investment typically results in better rates and terms.
Cost overruns are common in construction projects. Most lenders require a 10-20% contingency fund in the original loan. If costs exceed this, you may need additional financing through construction loan modifications, bridge loans, or personal funds. Some lenders offer automatic cost overrun provisions up to certain limits. Careful planning, detailed cost estimates, and experienced contractors help minimize overruns.
Yes, most lenders require franchisor approval of the site, building plans, and franchise agreement before loan approval. The franchisor must approve the location demographics, site layout, building design, and equipment specifications. Some franchisors have preferred lender relationships that can streamline the approval process. Obtain franchisor approval early in the process to avoid delays and ensure compliance with brand standards.