Franchise Funding for Veterans

Franchise opportunities come in a variety of investment sizes. Ownership of a home-based franchise may cost under $30,000 while investment into a chain of high-profile restaurant franchises could reach into the millions of dollars. Assuming you don’t have the millions, or even the $30,000, but you are a United States veteran with great training and skills, how can you buy a franchise? There are options and, in recognition of your service to our country, a loan program only available to veterans.

First, consider where the money needed to buy a franchise will go. There are two major parts of your initial franchise purchase: 1) the franchise fee, which covers access to the brand and some of the expense the franchisor incurs with training a new franchisee and 2) the start-up costs, which will be the cost of all of the items you need to start the business. For some businesses, this cost can be relatively small, such as for a home-based operation that requires little or no inventory. For other businesses, the cost can be much greater, such as for a large retail store with lease costs, custom fixtures, signage, inventory, multiple employees, etc.

Options for financing a franchise

Some veterans may have substantial savings, an inheritance or separation pay coming as they transition from the military and may not need to borrow money for the purchase of a business. But if you do need a loan, there is help available.

The Patriot Express Pilot Loan Initiative was announced in 2007 as, “a streamlined loan product based on SBA’s highly successful SBA Express Program, but with enhanced guarantee and interest rate characteristics.” This SBA guaranteed loan program is for military veterans or those currently in the military who are close to retirement (check the SBA website at for eligibility requirements) or their spouses. The SBA will guarantee up to 85% of the loan (for loans up to $150,000), meaning the lender only is at risk for 15%, which makes these loans much more attractive to the lender. Best of all, the credit score requirements for Patriot Express loans are significantly lower than what we otherwise see in the current market so these loans are easier to qualify for.

The government recognizes that this program not only helps military personnel, it also spurs the creation of new businesses, which in turn helps our economy. Patriot Express Loans can be used for most business purposes, including starting or expanding a business and the associated costs (equipment purchases, inventory or business-occupied real-estate purchases) and also the working capital needed to keep a business going until profitable.

Low interest rates are an important feature of the Patriot Express Loans. The rates are generally 2.25 percent to 4.75 percent over prime depending upon the size and maturity of the loan. For help applying for a Patriot Express business loan, contact your local SBA district office to find an authorized lender in your area. Details on the initiative can be found at

Other Financing Options

There are other ways to finance a franchise besides loans. Some people choose to use credit cards, savings, cash out home equity, borrow from their 401K accounts or get money from investors or relatives. Which option is best? Each person’s needs and resources are unique.

If you have all the money you need in liquid or semi-liquid assets (such as savings, stocks, separation pay, etc.) to start a business as well as run it to the break-even point, you could self-finance the purchase. However, be sure you weigh the “opportunity cost” of tying up your capital and compare that to the “hard cost” of another type of financing.

Credit cards, which often have a higher interest rate than most business loans, are usually not the best choice but may come in handy for emergency purchases. Home equity financing was a popular method of financing a small business until the real estate market stalled and housing prices fell.

Housing prices are not the only asset to have suffered in this economy. The retirement savings accounts of many people have been decimated. However, if you or your spouse still have money in a 401K or similar account, the government will allow you to borrow from that account, tax and interest free, for the purchase of a business. Best of all, as you pay back the loan from the proceeds of your business, you are actually paying yourself!

You can also use a combination of sources to acquire funding for a franchise purchase. If you think you may need help finding the best option, consider using a Franchise Funding Specialist (we’ve listed several under “Resources”) who can help you determine what you need and the best lenders to provide the financing.

More Help for Veterans

Honorably discharged military personnel should also look into the VetFran program which was started by the International Franchise Association as a way to help veterans. To date over 350 concepts have joined the program. These franchisors offer substantial discounts on fees and/or expenses as a way to show appreciation for to those who have provided honorable service to our country.

Needed: Creativity and Patience

Because there are many different ways to finance a new business, you should be prepared to do some careful research on the subject to make sure you find the option that will work best for you. Though the financing market has gotten more difficult in this tight credit cycle, there are always loan dollars available for the right person and the right opportunity and options for military veterans are very positive.

One of your best sources of information will be the franchise company you would like to join. They have experience with the types of financing available and some companies will offer financing themselves or through third parties. Consider your financing options early in the process so you can determine your price range before you start looking at specific franchise opportunities.

If you’d like to find out how your skills will help you transition from the military to franchise ownership, please visit our website at




Contact Information



Specialists in small business funding.



Website listing top franchise and business opportunities for sale.

CatchFire Funding


CatchFire Funding can help you find experienced bankers with competitive rates.


Articles, advice, franchises for sale, industry events, resources, and more.

Franchise Gator


Website listing top franchise and business opportunities for sale.



Free consultation service provided by the industry experts in finding you the right franchise business.



Specialists in franchise funding. FranFund can help you avoid the pitfalls and get you up and funded in a fraction of the time.



The International Franchise Association is the source for all things franchise related.

Patriot Express


Initiative offering low cost loans to veterans interested in the purchase or expansion of a business.



Organization offering benefits just for veterans in the purchase of a franchise business.

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