Franchise Affordability Calculator

What the calculator does

The tool runs four lines of arithmetic, in this order:

1. Cash you will inject = liquid capital minus the reserve you keep back (never below zero).
2. Total investment you can support = cash you will inject divided by the equity percentage. The percentage field is clamped to a range of 5 to 100.
3. Estimated loan = total investment minus the cash you inject.
4. Monthly payment = the standard level-payment amortization formula on that loan, using the rate divided by twelve and the term in months (rate clamped to 0 to 30 percent, term to 1 to 25 years). At a zero rate it divides the loan by the number of months.

Nothing else goes in. The tool does not add the SBA guaranty fee, closing costs, rent deposits, taxes, or your credit and collateral to the picture, and it does not check whether the business could repay the loan. Two behaviors to know about. First, the percentage field accepts values from 5 percent, which is below the SBA 10 percent floor described below, so entering 5 to 9 gives a number no SBA lender could use. Second, the bracket sentence under the results (under $100,000, $100,000 to $300,000, $300,000 to $600,000, $600,000 and up) is our own sorting aid. It is not a table of brand prices, and it is not a lender rule.

A worked example (invented numbers)

Suppose a buyer has $150,000 in liquid capital, decides to keep $30,000 back, and uses our 15 percent default with a 10 percent rate over 10 years. These figures are illustrative only.

• Cash to inject: $150,000 minus $30,000 = $120,000.
• Total investment supported: $120,000 divided by 0.15 = $800,000.
• Loan: $800,000 minus $120,000 = $680,000.
• Payment: at 10 percent over 120 months the level payment is about $8,986 a month, or $107,835 a year.

Run the same buyer at the 10 percent floor and the supported project doubles to $1,200,000 (a $1,080,000 loan and about $14,272 a month). That is why the equity percentage matters more than any other input, and also why a bigger number is not the goal. The payment has to be covered by the store, so the last step of any affordability check is to turn the payment into the operating cash flow the unit must produce, covered below.

How SBA lenders treat your equity

The rule that sets the floor is in the SBA’s lending rulebook, SOP 50 10. Version 8 took effect June 1, 2025. Version 8.1 took effect October 1, 2026 and replaced it (the copy with technical policy updates shows a September 25, 2026 publication date). Both versions treat a business that has been generating revenue for one year or less as a start-up and state that SBA considers “an equity injection (Applicant contribution) of at least 10 percent of the total project costs” necessary, with total project costs defined as “all costs required to become operational, regardless of the source of funds, except for lines of credit and 504 loans.” Version 8.1 sets the same 10 percent minimum for an initial acquisition of an existing business and adds that this required injection “cannot be reduced or eliminated.”

Two details change what counts as your cash. The rulebook lists cash that is not borrowed among the sources that may count as equity, along with cash from a personal loan only where repayment can be shown to come from a source other than the business’s cash flow. It also says expenses for education, advisory services, or fees paid to an agent are not eligible prepaid expenses. So cash drawn on a credit line that the store will repay does not appear among the listed sources, and a liquid-capital number that includes it overstates your equity. The equity sections we read set the 10 percent minimum and leave anything higher to the lender, which is why 15 percent here is our planning assumption, not a rule. Our guide to SBA loans for a food franchise covers the underwriting in more detail, and thedown payment calculator compares SBA 7(a), SBA 504, and conventional structures side by side.

Why the reserve field matters: Item 7 only counts about three months

Under the FTC Franchise Rule, the estimated initial investment table in Item 7 must include a line called “Additional funds” for expenses before opening and during an initial period, and the rule says that a reasonable initial period is at least three months or a reasonable period for the industry (16 CFR 436.5(g)). The figures are the franchisor’s own estimates. As one published example, the Scooter’s Coffee franchise site lists “Additional Funds – 3 Months” of $29,000 to $119,000 inside a $658,898 to $1,068,525 total for its drive-thru end cap format, about 4 to 11 percent of the total (franchising.scooterscoffee.com, retrieved September 29, 2026; the page cites Items 5 and 7 of its FDD and shows no FDD year). If a location takes longer than the disclosed period to cover its costs, the money that carries you past month three is yours alone. That is the job of the reserve field: enter what you would need to keep paying your own rent and bills, separate from the store’s working capital.

The royalty calculator shows the ongoing fees that come out of sales on top of the loan payment. The same Scooter’s page lists a royalty of 6 percent of net sales and an advertising fee of 2 percent of net sales; other brands differ, and Item 6 of each FDD is where to confirm them.

Turn the payment into the cash flow the store must earn

SBA lenders size a loan against repayment ability. SOP 50 10 defines debt service coverage as operating cash flow divided by debt service, and operating cash flow as earnings before interest, taxes, depreciation, and amortization (EBITDA). For a standard 7(a) loan above $350,000 the rulebook says the ratio “must be equal to or greater than 1.15” on a historical and/or projected basis and 1:1 on a global basis; for a 7(a) Small loan of $350,000 or less (other than a change of ownership) it sets 1.10:1. For an initial acquisition of an existing business, version 8.1 sets the historical minimum at 1.25:1 and does not let the lender rely on projections to meet it.

Applied to the worked example: $107,835 a year of payments times 1.15 means the unit would need about $124,010 of EBITDA a year, before your own pay is considered. Check that number against the brand’s Item 19 if it has one (with the limits described in ourItem 19 guide) and against your own projection, not against the size of the loan you can technically obtain.

What the brackets do and do not tell you

Published totals for coffee formats run wide. Two brand-published examples, both retrieved September 29, 2026: Scooter’s Coffeelists $658,898 to $1,068,525 for an end cap and $1,163,650 to $1,345,750 for a kiosk, andDunn Brothers Coffeesays its total investment “typically ranges from $455,600 to $798,960, as outlined in Item 7 of the FDD.” Under our brackets, both fall in the $600,000-and-up band or straddle it, which is a reminder that a bracket is a sorting aid only. Brand totals change with each FDD, so treat these as dated examples, read the current Item 7 (see our Item 7 guide), and compare it with the total this tool says you can support. To check the equity side of the same totals, the 10 percent floor on $658,898 is $65,890 and on $1,068,525 is $106,853, before the reserve.