Launching a new small business or franchise is an exciting venture, but securing financing can feel daunting. Startup loans provide the capital to turn your vision into reality, covering costs like equipment, inventory, or initial operating expenses. LoanBox simplifies the process, connecting you with lenders who embrace startups for your specific brand.

Loan Options for Startups

Conventional Lending

Best For: Startups with strong net worth and industry experience.

Details: Typically require a 25% equity injection (75% LTV cap), strong PFS, and prior business experience.

SBA Lending

Best For: Startups seeking low rates and flexible terms, especially franchises.

Details: 7(a) loans up to $5 million, Express up to $500,000, Microloans up to $50,000.

ROBS / Retirement Investment

Best For: Entrepreneurs with significant retirement savings ($50,000+).

Details: Use 401(k) or IRA funds without tax penalties, requiring a C-corporation and new 401(k) plan setup.

SBA Startup Loans

SBA loans, particularly 7(a), Express, and Microloans, are a cornerstone of startup financing due to their accessibility and favorable terms. Startups, including franchises, account for ~20% of 7(a) loans and ~40% of franchise-funded loans annually, reflecting strong SBA support.

Key Requirements:

Guaranties: Owners with 20%+ ownership must provide unlimited personal guaranties, covering the loan balance, interest, and collection costs.
Collateral: Business assets (e.g., equipment, inventory) are primary; for loans over $350,000, real estate with 25%+ equity may be required if assets are insufficient. Express loans ($50,000 or less) and Microloans may skip collateral. A HELOC can avoid home liens. Startups often rely on personal assets due to limited business collateral.
Debt-to-Worth Ratio: A 9:1 or lower ratio (total debt ÷ total equity) supports approval and may influence equity injection requirements.

Equity Injection:

The 10% equity injection must cover total project costs (e.g., purchase price, fees, working capital).

Cash: Paid by the borrower using savings, a Home Equity Line of Credit (HELOC), or gifts (accompanied by a gift letter confirming no repayment obligation). Verified through recent account statements.

Franchisee Fee: Any franchisee fees paid do not count towards the equity injection requirement.

Lender Discretion: Many lenders still require 10–30% equity injection (cash, family gifts, or franchise fees paid), influenced by your PFS strength, net worth, and collateral. Weaker PFS may lead to higher injections (e.g., 20–30%).
Franchise Advantage: Fees paid to franchisors (e.g., initial franchise fees) often offset part of the injection.

These pie charts are based on all funded SBA 7(a) loans to startup businesses for all lenders, industries, and brands nationwide.

Project States for Startup Business Loans

FY 2024 SBA 7(a) Startup Business Funded Dollars

All states had a change of ownership loan funded with borrowers from 2,498 cities.

SBADNA Analytics

All SBA data mentioned or shared on this website comes from the lending analytics platform developed and maintained by SBADNA Analytics. SBADNA and LoanBox are both owned by the same parent company FuseSync LLC. Neither LoanBox nor SBADNA validates or verifies the source data released by the SBA.

Data Source & Methodology

The original source of SBA loan data is derived from data released by the U.S. Small Business Administration (SBA). The SBA collects individual loan data from the SBA lender/bank approving and providing SBA loans. The SBA then makes basic loan data public through the FOIA (Freedom of Information Act) requirements. The SBA FOIA data is imported into the SBADNA advanced analytics platform which is then used to generate the reports and rankings

Franchise and Small Business Startup Loans