Franchise Down Payment Calculator

Lenders call your down payment an equity injection: the share of the total project you fund yourself. How much you need depends far more on the loan program than on the brand. The three paths below are the ones most food-franchise buyers compare.

What the calculator computes

Every output is your total investment times a percentage. Nothing is sized to a loan, and no fee is added.

• SBA 7(a) floor: total times 10 percent, for both deal types. Under the line, “Planning range” is our own assumption (15 to 20 percent for a start-up, 10 to 15 percent for an established unit), not an SBA figure.
• SBA 504: total times 15 percent when the deal type is a new franchise or first location, and 10 percent for an established unit.
• Conventional: total times 20 percent and times 30 percent. No SBA rule or other regulator we found sets a down payment for a conventional franchise loan, so this band is a placeholder. Ask the lender.

Two limits change how to read the numbers. First, an SBA 504 loan is for land, buildings, and long-term equipment: sba.gov lists“working capital or inventory” as uses 504 cannot fund. The 504 percentage therefore applies to the fixed-asset project, not to a franchise total that includes fees, opening inventory, and working capital, and a cafe that leases its space is mostly a 7(a) borrower. The 504 line is here for comparison. Second, the deal-type setting is a shortcut. The SBA defines a “New Business” for 504 purposes as one that has operated two years or less, and says a longer-operating business may still be a New Business if a change of ownership brings new, unproven management and added debt unrelated to operations, in which case the CDC decides whether an additional 5 percent contribution is needed. So the 10 percent shown for an established unit is a starting point.

A worked example (invented numbers)

Enter a $250,000 total investment. These figures are illustrative only.

The equity injection is not the cash you need at closing. At the 10 percent floor the loan is $225,000. The SBA guaranty is 75 percent above $150,000 (per sba.gov), so the guaranteed portion is $168,750, and the FY 2027 fee notice(7(a) loans approved October 1, 2026 through September 30, 2027) sets an upfront fee of 3 percent of the guaranteed portion for loans of $150,001 to $700,000: about $5,063. The SBA rulebook lets the lender pass that fee to the borrower. Paid in cash, cash at close is roughly $30,063 before any other closing cost. At a 15 percent injection ($37,500) the loan is $212,500, the fee is about $4,781, and cash at close is roughly $42,281. The notice sets the fee at 0 percent for loans of $700,000 or less to manufacturers, to businesses in listed food-supply-chain NAICS codes, and to businesses in a rural area, so ask whether your location qualifies.

SBA 7(a): a 10% minimum, set by the rulebook

The rulebook is SOP 50 10. Version 8 took effect June 1, 2025, and version 8.1 took effect October 1, 2026 and replaced it (the copy with technical policy updates shows a September 25, 2026 publication date). For a start-up, meaning a business that has generated revenue for one year or less, both versions call an injection of “at least 10 percent of the total project costs” necessary, and define total project costs as all costs required to become operational, regardless of the source of funds, except for lines of credit and 504 loans. Read literally, that base includes working capital and opening inventory that the project requires; confirm the treatment with your lender. Version 8.1 sets the same 10 percent for an initial acquisition of an existing business and states that this injection cannot be reduced or eliminated. Loans approved more than 90 days apart are treated as separate projects.

The 10 percent is the SBA’s minimum. The equity sections we read leave anything higher to the lender, so the 15 to 20 percent planning range on this page is our assumption. What counts as equity is spelled out. For a start-up, version 8.1 lists cash that is not borrowed (including a gift), cash from a personal loan where repayment can be shown to come from a source other than the business’s cash flow (the owner’s salary from the business does not qualify), grants without repayment provisions, verified eligible prepaid expenses, and debt on full standby (no payments of principal or interest for the loan’s term). It says education, advisory, and agent fees are not eligible prepaid expenses. For a change of ownership, standby debt, seller debt on full standby, and non-controlling minority investors (under 20 percent, no control) together may supply no more than half of the required injection. See our guide to SBA loans for a food franchise for how underwriting works.

Two franchise-specific points from version 8.1. If the brand meets the FTC definition of a franchise it must be on the SBA Franchise Directory for the loan to be made, so check the brand before you model anything. And for buying an existing unit, the debt service coverage minimum for an initial acquisition is 1.25:1 on historical results, and the lender may not rely on projections to meet it, which makes the seller’s financial statements, not your forecast, the deciding numbers.

SBA 504: 10, 15, or 20 percent

The SBA rulebook’s typical 504 structure is a bank or other lender at 50 percent, the CDC and SBA at 40 percent, and the borrower at 10 percent. The borrower share becomes 15 percent for a New Business or a Limited or Special Purpose Property, and 20 percent for both. On the restaurant question, the SBA’s own list of examples of limited or special-purpose properties (which it says is not all-inclusive) names 25 property types, including car washes, gas stations, hotels, bowling alleys, and wineries, and does not name restaurants or cafes. A CDC, Community Business Finance, wrote on June 26, 2023 that restaurants are classified as multipurpose despite their unique characteristics. A highly customized build could still be judged differently, so confirm with your CDC.

Conventional bank loan

Without an SBA guaranty, the lender sets its own down payment, and we found no published rule to quote. The calculator shows 20 to 30 percent as a placeholder for planning. One place a figure is disclosed for you: if the franchisor or an affiliate finances part of the initial investment, the FTC Franchise Rule requires Item 7 to state the amount financed, the required down payment, the annual interest rate, and the estimated repayments (16 CFR 436.5(g), onCornell LII). Read Item 7 in our Item 7 guide before assuming a bank sets the terms. To see what your cash can reach from the other direction, use theaffordability calculator.