SBA 7(a) Q&A
Short answer
The standard 10% equity injection requirement applies to franchise acquisitions, with no special exceptions for franchises.
Purchasing a franchise is treated like any other business acquisition for SBA equity injection purposes. The buyer must provide a minimum of 10% of the total project costs (purchase price, working capital, inventory, closing costs) as equity from unencumbered sources.
If the total project cost to acquire a coffee shop franchise is $400,000 (including purchase price, inventory, and initial working capital), you would need to inject at least $40,000 of your own unencumbered funds.
Insider move
Lenders verify the source and sufficiency of the equity injection for franchise acquisitions, ensuring it meets the 10% minimum and is from eligible sources, as with any other business purchase.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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