The most common sources of franchise financing in the United States are five: your own capital, bank loans backed by the Small Business Administration (SBA), in-house financing offered by some franchisors, equipment leasing and investor partners. Many brands state in Item 10 of their FDD whether they offer direct financing and on what terms.

SBA-guaranteed loans, such as the 7(a) program, are made by banks and other participating lenders, not by the SBA directly. Their eligibility rules, including the owners’ citizenship or residency requirements, change over time; many foreign investors do not qualify, so confirm the current conditions with the SBA and the bank before counting on that money.

If your plan includes an E-2 visa, there is an important limit: loans secured by the assets of the business itself do not count as an investment at risk. A personal loan backed by your own assets, on the other hand, may be considered if it is well documented. An immigration attorney should review the structure before you sign.

Before choosing how to fund the purchase, prepare a budget with the estimated initial investment in Item 7 of the FDD, add enough working capital for the first months and compare the total cost of each alternative. An FBA certified franchise broker helps you focus on brands whose investment range matches the capital you can really commit.

It also helps to ask current franchisees how they funded their unit and how long it took them to cover their operating expenses. The list of franchisees appears in Item 20 of the FDD and lets you contact them directly. Their answers do not guarantee results, but they help you size the working capital you need and avoid running out of cash during the opening, one of the most common risks in a new business.