For franchise owners looking to scale their business, securing the right financing is essential. Expanding operations, purchasing real estate, and investing in high-value equipment all require significant capital, making access to affordable, long-term financing a key factor in success.

One of the most effective yet often overlooked financing tools for franchise growth is the SBA 504 Loan Program. Designed specifically for purchasing commercial real estate, large-scale equipment, and leasehold improvements, the program offers below-market, fixed interest rates and long repayment terms—a combination that helps franchisees secure their future while keeping capital available for business operations.

Why the SBA 504 Loan Is a Game-Changer for Franchise Owners

The SBA 504 program provides several distinct advantages over conventional lending options:

✔ Low Down Payment – Typically just 10% down, compared to 20-30% required by conventional loans. This preserves capital for other business needs.

✔ Fixed Interest Rates – Unlike conventional commercial loans, which are subject to rate fluctuations, SBA 504 loans lock in a fixed interest rate for the life of the loan—up to 25 years.

✔ Long-Term Stability – The extended repayment terms allow franchisees to spread out costs, keeping monthly payments manageable.

✔ Equity Building – Rather than paying rent and dealing with potential lease increases, franchisees build equity in their own property, strengthening their long-term financial position.

✔ Flexibility for Expansion – The 504 program can be used for new locations, renovations, or equipment purchases, making it an ideal solution for franchisees planning for sustained growth.

Case Study: Wendy’s Franchise Owner Expands with the SBA 504 Loan

To illustrate the program’s impact, consider a real-world example: a Wendy’s franchisee looking to expand operations.

After successfully operating several Wendy’s locations, the franchise owner identified an opportunity to purchase an existing fast-food property in a high-traffic area rather than continuing to lease. However, securing financing through a conventional loan proved challenging due to the high upfront capital requirement and fluctuating interest rates.

By utilizing an SBA 504 loan, the franchisee was able to:

✅ Secure financing with just 10% down, preserving cash flow for operational expenses.
✅Lock in a low, fixed-rate mortgage over a 25-year term, eliminating concerns about rising interest rates.
✅Reduce overall occupancy costs, since mortgage payments were comparable to previous lease payments—but with the added benefit of equity accumulation.
✅Upgrade the location with new kitchen equipment and modernized interior renovations, funded through the same SBA 504 loan structure.

The result? A stronger financial foundation, increased profitability, and the ability to reinvest in additional locations for continued growth.

Case Study: FASTSIGNS Oakland – Using SBA 504 for Multiple Expansions

Another franchisee who successfully leveraged the SBA 504 program is Linda Fong, owner of FASTSIGNS Oakland. After purchasing a property using an SBA 504 loan, her business continued to grow rapidly. Just three years later, she utilized the program again to purchase a 6,000-square-foot standalone industrial building in Oakland for $1,850,000.

Like many small business owners, Linda initially thought she could only obtain one SBA 504 loan at a time. However, franchisees can actually borrow up to $5 million in total SBA 504 financing, with even higher limits for certain energy-efficient or manufacturing projects.

By securing her second SBA 504 loan, Linda was able to:

✅ Purchase a larger facility with only 10% down, preserving capital for business growth.
✅Lock in record-low, fixed interest rates over a 25-year term, ensuring long-term stability.
✅Consolidate production and sales operations into a single location, improving efficiency.
✅Avoid the financial constraints of leasing, ensuring predictable long-term occupancy costs.

“The SBA 504 program made this purchase possible,” Linda explains. “A lot of business owners hesitate because they think the process is too complicated, but I actually enjoyed it! It made me a smarter businessperson because it forced me to think strategically about my company’s future.”

Making the Right Financial Move for Your Franchise

For franchisees considering expansion, the SBA 504 loan program presents a strategic financing option that supports both immediate business needs and long-term financial success. Whether purchasing a building, renovating a current location, or acquiring high-value equipment, the program’s low-cost structure and stability make it an invaluable tool for sustainable franchise growth.

If you’re a franchise owner looking to expand or transition from leasing to ownership, now is the time to explore the SBA 504 loan program. With the ability to secure below-market financing while preserving working capital, franchisees can position themselves for long-term success and financial security—just like Wendy’s franchise owners and countless other business operators have done.