Franchise Loan? Here's How to Secure Funds Fast (2026)

Thinking of diving into the world of business ownership with a franchise, but unsure if you can secure the necessary loan? You're not alone. Many aspiring entrepreneurs in Australia face this very dilemma. The good news is, securing financing to buy a franchise is indeed possible, with a range of options available to suit different needs and circumstances. Let's explore how you can make your franchise dream a reality.

Understanding Franchise Loans

Franchise loans are specifically designed to help prospective franchisees cover the costs associated with purchasing and operating a franchise. These costs often include the franchise fee, fit-out expenses, equipment, and working capital. The unique aspect of franchise loans is that lenders often consider the franchise model's proven track record and support system, which can make these loans more accessible compared to starting a business from scratch.

Current Market Rates and Loan Options

As of 2026, interest rates for franchise loans in Australia typically range from 6.49% to 12%, depending on factors such as your credit score, the franchise you wish to purchase, and the lender's terms. Lenders may offer different types of financing, including term loans, lines of credit, and equipment financing. Some may also provide specialised franchise finance products.

It's crucial to compare different lenders. With access to over 83 lenders, Esteb and Co can help you find the right fit for your specific needs, ensuring you're getting the best possible terms.

Steps to Secure a Franchise Loan

Securing a franchise loan involves several key steps. Follow these to increase your chances of success:

1. Research Your Franchise: Understand the costs involved, including the franchise fee, ongoing royalties, and additional expenses. Choose a franchise with a strong track record and support system.
2. Prepare a Business Plan: Your business plan should detail your operational and financial strategy, demonstrating to lenders how you plan to run a successful franchise.
3. Check Your Credit Score: A strong credit score improves your chances of securing a loan with favourable terms. Check your credit report and resolve any issues before applying.
4. Gather Documentation: Lenders will require various documents, including financial statements, tax returns, and proof of personal assets. Having these ready will speed up the application process.
5. Consult with a Broker: A mortgage broker like Esteb and Co, with access to 83+ lenders, can provide tailored advice and help you navigate the application process efficiently.
6. Submit Your Application: Once you've chosen a lender, submit your application along with the necessary documentation.
7. Negotiate Terms: If approved, review the loan terms carefully and negotiate if necessary to ensure the terms meet your business goals.

Tips and Considerations

Before applying for a franchise loan, consider these expert tips:

• Assess the Franchise's Success Rate: Choose a franchise with a high success rate and strong brand recognition to improve your loan approval chances.
• Plan for Additional Costs: Beyond the loan, ensure you have additional funds for unexpected expenses, especially during the initial setup phase.
• Understand the Franchise Agreement: Thoroughly read the franchise agreement to understand your obligations and fees involved.
• Seek Professional Advice: Engage financial advisors or accountants to review your business plan and financial projections.

Frequently Asked Questions

1. Can I get a franchise loan with bad credit? While having bad credit can make it more challenging, some lenders may still consider your application, especially if the franchise is well-established.
2. How much can I borrow for a franchise loan? The amount you can borrow varies, but lenders typically offer up to 70% of the total franchise cost.
3. Do I need collateral for a franchise loan? Many lenders require collateral, but some may offer unsecured loans depending on the franchise's strength and your financial profile.
4. How long does the loan approval process take? This varies by lender but typically ranges from a few weeks to a couple of months.
5. Are there any government grants for franchise purchases? While direct grants for purchasing franchises are rare, there may be government incentives for small business owners that you can explore.
6. What happens if my franchise fails? If your franchise fails, you are still responsible for repaying the loan. This underscores the importance of selecting a robust franchise and planning thoroughly.
7. Can I refinance my franchise loan? Yes, refinancing is an option if you find a lender offering better terms, which can be facilitated through a broker like Esteb and Co.