A comprehensive guide to funding your franchise purchase — from government-backed loans to private investors.
A federal government program that makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Easier approval than conventional loans — government shares 85% of the risk
Available through all major banks and credit unions
Competitive interest rates compared to unsecured business loans
Can finance leasehold improvements, equipment, and real property
Cannot be used for working capital, franchise fees, or inventory
Business must have annual revenues under $10 million
Personal guarantee required (limited to 25% of original loan amount)
BDC provides financing specifically tailored to entrepreneurs and small businesses, including franchise buyers. They're often more flexible than traditional banks.
Dedicated franchise lending team that understands franchise business models
Will lend alongside traditional banks (complementary financing)
More flexible on collateral requirements than traditional banks
Can finance franchise fees, working capital, and equipment in a single loan
Free business advice and mentoring included
Higher interest rates than traditional bank loans or CSBFP
Application process can be lengthy (4-8 weeks)
Personal guarantee always required
All major Canadian banks (RBC, TD, BMO, Scotiabank, CIBC) have small business lending programs. Several have dedicated franchise lending divisions.
Competitive interest rates for strong borrowers with established franchise brands
Existing banking relationships can accelerate approval
RBC, TD, and BMO have dedicated franchise lending specialists
Can combine with CSBFP to maximize leverage
Strict qualification requirements (credit score 680+, strong personal net worth)
Established franchise brands preferred — harder for emerging concepts
Requires substantial personal equity (25-50%)
Comprehensive documentation and business plan required
Some franchisors offer direct financing or have preferred lending partners to help qualified candidates get started.
Franchisor is invested in your success
May reduce upfront cash requirements
Faster approval since they already know the business model
Some brands offer reduced franchise fees for multi-unit commitments
Not all franchisors offer this
May come with additional obligations or restrictions
Interest rates may not be competitive vs. bank loans
Deferred fees still must be paid — they reduce cash flow later
Using a Home Equity Line of Credit (HELOC) or refinancing your mortgage to access capital for your franchise investment.
Lowest interest rates of any borrowing option
Flexible draw and repayment schedule
No approval needed from the franchisor
Can be combined with other financing sources
Puts your home at risk — if the business fails, you could lose your house
Reduces your personal financial safety net
Variable rate means payments can increase
May require new home appraisal and refinancing costs
Bringing in a business partner, silent investor, or accessing funds from family and friends.
Reduces personal financial risk
Partner may bring complementary skills or industry experience
More flexible terms than institutional lenders
Can fill the gap between personal capital and bank financing
Franchisor must approve any partners or owners — some won't allow silent investors
Partnership disputes can jeopardize the business
Shared profits reduce your personal return
Complex legal agreements needed — require a lawyer
Use our ROI Calculator to model your franchise investment and see projected returns.