Even if you have a bad credit score or poor credit history, it's still possible to qualify for a franchise loan. Franchise loan amounts can vary from $10,000 to $100,000, but there are many factors involved in how much you will qualify for to get your franchise business up and running. If you have bad credit because of poor payment performance, or have had a few financial setbacks, there is still hope for obtaining a loan.

When you start to look for business funding options, it's important to go to a bank first. Lenders from banks and other financial institutions take into consideration a few key factors before extending a business loan. These include how much money you already have to invest in your business. If the answer is none, it's likely that you won't have much collateral to work with to secure your loan. Lenders will look at your credit history for indications of creditworthiness and the potential for your loan amount. If this is less than a certain amount, you won't be eligible for a bank loan. Banks also look for your potential as a franchise business owner; this can include qualifications as a manager, previous business owner, or a pattern of strong leadership and managerial skills from other jobs.

If the bank turns you down for your franchise loan because of bad credit, the next step is to work with the Small Business Administration. Lenders here will work with borrowers who may have poor credit or bad credit, and work with different criteria than banks. SBA loans look for franchise businesses that have less than $13.5 million in sales, and they must be for profit. The SBA is looking for a strong business plan, so it's essential that you have this information readily available and include all revenue projections and funding options. Prospective franchisees should have some working capital or collateral to invest in a part of their loan; this can sometimes take precedence over poor credit history in the eyes of the SBA. A strong work history or experience in the industry of your franchise is another factor for success in qualifying you for a franchise loan, so it's important to include a resume or samples of work history as part of your application.

If the SBA does not extend a loan, there are still other options if you have bad credit. You can find an angel investor to cover the costs of your business, work with a business partner to obtain a loan, or submit a grant proposal in your local community. Even with bad credit, many people have had success in obtaining a franchise loan for their new business.