{"id":34677,"date":"2026-10-28T03:30:40","date_gmt":"2026-10-28T03:30:40","guid":{"rendered":"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/"},"modified":"2026-10-28T03:30:52","modified_gmt":"2026-10-28T03:30:52","slug":"secured-vs-unsecured-franchise-loans","status":"publish","type":"post","link":"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/","title":{"rendered":"Secured vs Unsecured Franchise Loans: UK Guide"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_89 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #101010;color:#101010\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #101010;color:#101010\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#secured-vs-unsecured-at-a-glance\" >Secured vs unsecured at a glance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#what-a-secured-franchise-loan-is\" >What a secured franchise loan is<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#why-franchisees-choose-secured-lending\" >Why franchisees choose secured lending<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#what-an-unsecured-franchise-loan-is\" >What an unsecured franchise loan is<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#unsecured-does-not-always-mean-no-personal-risk\" >Unsecured does not always mean no personal risk<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#amounts-rates-and-terms-in-the-uk\" >Amounts, rates and terms in the UK<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#bank-franchise-lending\" >Bank franchise lending<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#the-government-backed-start-up-loan\" >The government-backed Start Up Loan<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#which-loan-suits-which-kind-of-franchisee\" >Which loan suits which kind of franchisee<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#you-own-property-or-business-assets\" >You own property or business assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#you-have-savings-but-few-assets\" >You have savings but few assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#you-are-leaving-employment-for-your-first-business\" >You are leaving employment for your first business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#you-need-a-large-sum-or-a-multi-unit-territory\" >You need a large sum or a multi-unit territory<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#eligibility-what-lenders-check\" >Eligibility: what lenders check<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#what-is-at-risk-if-repayments-are-missed\" >What is at risk if repayments are missed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#questions-to-ask-before-you-choose\" >Questions to ask before you choose<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#build-a-funding-plan-not-a-single-loan\" >Build a funding plan, not a single loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#find-a-franchise-that-fits-your-budget\" >Find a franchise that fits your budget<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#faq\" >FAQ<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#is-a-secured-or-unsecured-franchise-loan-better\" >Is a secured or unsecured franchise loan better?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#can-an-unsecured-franchise-loan-still-put-my-home-at-risk\" >Can an unsecured franchise loan still put my home at risk?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#can-i-get-a-start-up-loan-to-buy-a-franchise\" >Can I get a Start Up Loan to buy a franchise?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#how-much-of-a-franchise-can-a-bank-fund\" >How much of a franchise can a bank fund?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/secured-vs-unsecured-franchise-loans\/#sources\" >Sources<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 7<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><\/p>\n<p>A secured franchise loan is backed by an asset the lender can claim if you stop repaying. An unsecured franchise loan is not tied to a named asset. Secured borrowing is generally cheaper and can reach larger sums. Unsecured borrowing is usually quicker and keeps your property out of the deal, but it typically costs more and often comes with a personal guarantee. <a href=\"https:\/\/www.british-business-bank.co.uk\/sites\/g\/files\/sovrnj166\/files\/2026-01\/making-business-finance-work-for-you-expanded.pdf\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">The British Business Bank<\/a> makes the same cost point for UK business finance in general.<\/p>\n<p>The right choice depends on what you can offer as security, how much you need, how fast you need it and how much risk you are prepared to carry personally. This guide takes each in turn, with figures from official and lender pages.<\/p>\n<div data-blg-cta=\"after_tldr\" data-blg-cta-layout=\"banner\" style=\"margin:28px 0;font-family:-apple-system, BlinkMacSystemFont, &apos;Segoe UI&apos;, Roboto, Helvetica, Arial, sans-serif\">\n<div style=\"border-radius:26px;padding:min(22px,3.2vw);background:radial-gradient(circle at 100% 0%,#fdeed3 0 150px,rgba(255,255,255,0) 151px),radial-gradient(circle at 0% 100%,#fdeed3 0 130px,rgba(255,255,255,0) 131px),linear-gradient(180deg,#fef3e2 0%,#fef9f0 100%)\">\n<div style=\"background:#ffffff;border-radius:18px;overflow:hidden\">\n<div style=\"padding:34px 30px;text-align:center\">\n<div style=\"margin:0 0 18px\"><span style=\"display:inline-block;max-width:100%;border-radius:999px;padding:6px 13px;font-size:12px;font-weight:800;letter-spacing:0.1em;text-transform:uppercase;line-height:1.3;background:#f59e0b;color:#1f2937\">Franchiselocal<\/span><\/div>\n<div style=\"font-size:26px;font-weight:800;line-height:1.2;letter-spacing:-0.01em;color:#1f2937;margin:0\">Find a Franchise That Fits Your Plans<\/div>\n<div style=\"width:56px;height:6px;border-radius:3px;background:#f59e0b;margin:12px 0 14px;margin-left:auto;margin-right:auto\"><\/div>\n<div style=\"font-size:15px;line-height:1.55;color:#64748b;margin:0 0 24px;max-width:44em;margin-left:auto;margin-right:auto\">Explore UK franchise opportunities by investment level, industry, lifestyle preference and location as you consider your funding options.<\/div>\n<p><a href=\"https:\/\/franchiselocal.co.uk\/\" style=\"display:inline-flex;align-items:center;gap:9px;border-radius:10px;font-weight:700;font-size:15px;text-decoration:none;padding:13px 22px 13px 26px;background:#f59e0b;color:#1f2937\">Explore franchise opportunities<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 id=\"secured-vs-unsecured-at-a-glance\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"secured-vs-unsecured-at-a-glance\"><\/span>Secured vs unsecured at a glance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<thead>\n<tr>\n<th><\/th>\n<th>Secured franchise loan<\/th>\n<th>Unsecured franchise loan<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Security<\/td>\n<td>Business-owned or other named assets, such as property, machinery or stock<\/td>\n<td>No named asset used as security<\/td>\n<\/tr>\n<tr>\n<td>Typical cost<\/td>\n<td>Generally lower interest<\/td>\n<td>Typically higher interest<\/td>\n<\/tr>\n<tr>\n<td>Personal guarantee<\/td>\n<td>Possible, depending on the lender<\/td>\n<td>Often required<\/td>\n<\/tr>\n<tr>\n<td>Speed<\/td>\n<td>Usually slower, as security must be assessed<\/td>\n<td>Usually quicker<\/td>\n<\/tr>\n<tr>\n<td>Best suited to<\/td>\n<td>Larger sums and buyers with assets to offer<\/td>\n<td>Smaller sums, new owners and buyers with few assets<\/td>\n<\/tr>\n<tr>\n<td>Main risk<\/td>\n<td>Losing the asset if repayments are not maintained<\/td>\n<td>Personal liability and credit damage if you default<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Treat the table as a starting point. Lenders set their own terms, so two secured loans can look very different once you read the offer.<\/p>\n<h2 id=\"what-a-secured-franchise-loan-is\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"what-a-secured-franchise-loan-is\"><\/span>What a secured franchise loan is<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>With a secured loan, the lender takes security over an asset. According to the <a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/business-loans\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">British Business Bank<\/a>, the lender may seize that asset if repayments are not maintained. That is the trade: the lender carries less risk, so it can usually offer lower interest rates and competitive repayment terms.<\/p>\n<p>The security can take different forms:<\/p>\n<ul>\n<li>Property, including a UK property you own<\/li>\n<li>Machinery or equipment<\/li>\n<li>Stock<\/li>\n<li>Third-party security, such as a guarantee, used instead of or alongside other security<\/li>\n<\/ul>\n<p>The last point is easy to miss. The British Business Bank notes that lenders may consider third-party security instead of, or alongside, other forms. In practice this means a family member or another party could be asked to stand behind the loan. Anyone offering that should take independent legal advice first.<\/p>\n<h3 id=\"why-franchisees-choose-secured-lending\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"why-franchisees-choose-secured-lending\"><\/span>Why franchisees choose secured lending<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A franchise purchase often involves an initial fee, equipment, a vehicle, training costs and working capital. Those figures can add up quickly, and secured lending is where larger sums are usually found. One high street lender\u2019s franchising page shows the gap clearly: <a href=\"https:\/\/www.barclays.co.uk\/business-banking\/sectors\/franchising\/\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Barclays lists business loans of up to \u00a3100,000 unsecured or up to \u00a310 million secured<\/a>, with terms of up to seven years.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2026\/10\/1792987888517_Barclays-secured-and-unsecured-loan-limits.webp\" alt=\"Barclays secured and unsecured loan limits\" title=\"\"><\/p>\n<p>If you are buying a premium brand, taking on a multi-unit territory or buying a resale, secured lending is more likely to match the scale of the investment.<\/p>\n<h2 id=\"what-an-unsecured-franchise-loan-is\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"what-an-unsecured-franchise-loan-is\"><\/span>What an unsecured franchise loan is<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An unsecured loan does not require you to pledge a specific asset. The lender looks instead at your credit history, your finances and the strength of the plan. The British Business Bank notes that these loans typically carry higher interest rates than secured ones.<\/p>\n<p>That higher price reflects the lender\u2019s risk. If it cannot claim an asset, it prices the loan to cover the chance of non-repayment.<\/p>\n<h3 id=\"unsecured-does-not-always-mean-no-personal-risk\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"unsecured-does-not-always-mean-no-personal-risk\"><\/span>Unsecured does not always mean no personal risk<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This is where many first-time franchisees get caught out. The word \u201cunsecured\u201d describes the loan\u2019s security, not your exposure. The British Business Bank states that an unsecured business loan <a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/business-loans\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">may still require a personal guarantee<\/a>, which makes the owner personally liable if the business cannot repay.<\/p>\n<p>Its <a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/guide-personal-guarantees-business-borrowing\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">guide to personal guarantees<\/a> adds useful detail:<\/p>\n<ul>\n<li>A personal guarantee is a legally binding agreement. The owner or director becomes personally liable if the business defaults or becomes insolvent.<\/li>\n<li>Some lenders ask for a guarantee covering the full amount. Others may ask for as little as 20%.<\/li>\n<li>Guarantees are usually required for unsecured business loans, which are often easier to reach for small business owners, start-ups and sole traders without business assets.<\/li>\n<\/ul>\n<p>So an unsecured loan can still put your savings, and potentially your home, in play. Our guide to <a href=\"https:\/\/franchiselocal.co.uk\/news\/franchise-loan-personal-guarantee\" target=\"_blank\" rel=\"noopener\">personal guarantees on UK franchise loans<\/a> explains how to limit that exposure before you sign.<\/p>\n<h2 id=\"amounts-rates-and-terms-in-the-uk\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"amounts-rates-and-terms-in-the-uk\"><\/span>Amounts, rates and terms in the UK<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Figures differ by lender and change over time, so use the examples below as reference points and confirm current terms on the lender\u2019s own page.<\/p>\n<h3 id=\"bank-franchise-lending\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"bank-franchise-lending\"><\/span>Bank franchise lending<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>On its franchising page, Barclays states that it can fund <a href=\"https:\/\/www.barclays.co.uk\/business-banking\/sectors\/franchising\/\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">up to 70% of approved franchise costs<\/a> and, in some circumstances, offer up to 12 months of capital repayment holidays. Two practical points follow:<\/p>\n<ol>\n<li>Even with a supportive lender, you will usually need to put in your own money. If a lender funds up to 70%, the remaining share must come from you or another source.<\/li>\n<li>A capital repayment holiday can ease the first months of trading, when income is still building. It is worth asking about, because early cash flow is a pressure point for most new franchisees.<\/li>\n<\/ol>\n<p>For a broader view of what banks look for, read <a href=\"https:\/\/franchiselocal.co.uk\/news\/franchisee-financing-uk-banks\" target=\"_blank\" rel=\"noopener\">what UK lenders expect from franchisees in 2026<\/a>.<\/p>\n<h3 id=\"the-government-backed-start-up-loan\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"the-government-backed-start-up-loan\"><\/span>The government-backed Start Up Loan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Start Up Loan is the best-known unsecured option for new owners. According to <a href=\"https:\/\/www.gov.uk\/apply-start-up-loan\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">GOV.UK<\/a>, it is an unsecured personal loan for people who live in the UK and have, or plan to start, a UK-based business that has been fully trading for less than five years. It offers \u00a3500 to \u00a325,000 at a fixed interest rate of 7.5% per year.<\/p>\n<p>The <a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/start-up-loan\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">British Business Bank<\/a> adds that business partners can each apply for up to \u00a325,000, with a maximum of \u00a3100,000 per business, repayable over one to five years.<\/p>\n<p>For many franchisees this will not cover the whole purchase. It can work well as one layer of funding alongside your own savings or a bank loan. Check that the franchise you are considering is eligible: some business types, including property investment, banking and money transfer services, and gambling, are excluded from government-backed Start Up Loans.<\/p>\n<h2 id=\"which-loan-suits-which-kind-of-franchisee\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"which-loan-suits-which-kind-of-franchisee\"><\/span>Which loan suits which kind of franchisee<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There is no single winner. Match the loan to your situation.<\/p>\n<h3 id=\"you-own-property-or-business-assets\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"you-own-property-or-business-assets\"><\/span>You own property or business assets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Secured lending is worth pricing first. If you can offer security, the British Business Bank notes that secured loans are generally cheaper, and over several years a lower rate can save a meaningful amount. The question is whether you are comfortable with what the lender could claim.<\/p>\n<h3 id=\"you-have-savings-but-few-assets\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"you-have-savings-but-few-assets\"><\/span>You have savings but few assets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Unsecured lending is the more natural fit. It suits buyers who do not have assets to pledge, and it is often quicker. Expect a higher rate, and read any personal guarantee clause line by line.<\/p>\n<h3 id=\"you-are-leaving-employment-for-your-first-business\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"you-are-leaving-employment-for-your-first-business\"><\/span>You are leaving employment for your first business<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The British Business Bank says early-stage start-ups may struggle to get loans from traditional lenders. It points to Start Up Loans as an option for founders turned down elsewhere, and to community development finance institutions (CDFIs), which can consider applications from businesses with limited assets, trading histories or track records. A franchise can be an easier story to tell a lender than a blank-sheet start-up, because the model is already proven, but that depends on the brand and the lender.<\/p>\n<p>If you are still weighing the route itself, our comparison of <a href=\"https:\/\/franchiselocal.co.uk\/news\/franchise-vs-startup-which-suits-uk-entrepreneurs-best\" target=\"_blank\" rel=\"noopener\">franchise vs start-up<\/a> sets out the trade-offs.<\/p>\n<h3 id=\"you-need-a-large-sum-or-a-multi-unit-territory\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"you-need-a-large-sum-or-a-multi-unit-territory\"><\/span>You need a large sum or a multi-unit territory<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Larger borrowing tends to need security. Compare how much you can borrow unsecured against what the investment actually costs. If the gap is large, a secured facility, or a mix of loan types, may be the only workable route.<\/p>\n<h2 id=\"eligibility-what-lenders-check\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"eligibility-what-lenders-check\"><\/span>Eligibility: what lenders check<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Whatever the loan type, a lender wants to see that you can repay. Common checks include:<\/p>\n<ul>\n<li><strong>Credit history.<\/strong> For a Start Up Loan, GOV.UK says you must live in the UK, be at least 18 and pass a credit check.<\/li>\n<li><strong>A UK-based business and a clear funding requirement.<\/strong> You should be able to say exactly what you are borrowing for and why that figure.<\/li>\n<li><strong>A realistic repayment plan.<\/strong> Your forecasts should show how loan repayments fit around living costs and early trading.<\/li>\n<li><strong>Turnover that supports the borrowing.<\/strong> This matters more for established owners, such as someone adding a second territory.<\/li>\n<\/ul>\n<p>A tidy application helps. Bring the franchise agreement terms, the franchisor\u2019s disclosed costs, your own cash flow forecast and details of what you are putting in yourself.<\/p>\n<h2 id=\"what-is-at-risk-if-repayments-are-missed\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"what-is-at-risk-if-repayments-are-missed\"><\/span>What is at risk if repayments are missed<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Be clear about the downside before you pick a product.<\/p>\n<p><strong>Secured loan.<\/strong> The lender may seize the asset if repayments are not maintained. If the security is a property, that is a serious outcome. Think about it as a real possibility, not a technicality.<\/p>\n<p><strong>Unsecured loan with a guarantee.<\/strong> The guarantee makes you personally liable if the business defaults or becomes insolvent. Your personal assets can then be affected, even though no asset was named in the loan.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2026\/10\/1792987843384_How-loan-security-and-guarantees-expose-assets.webp\" alt=\"How loan security and guarantees expose assets\" title=\"\"><\/p>\n<p><strong>Start Up Loan.<\/strong> The British Business Bank says that missed repayments could affect your credit report. The provider may issue charges for which you are personally liable, and this could lead to a county court judgment (CCJ) or referral to an approved debt collection agent.<\/p>\n<p>If you already have debts, own your home with a mortgage, or are unsure how a guarantee works, speak to a regulated adviser or a solicitor before signing. A franchise accountant can also stress-test your forecast against slower-than-planned early months.<\/p>\n<h2 id=\"questions-to-ask-before-you-choose\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"questions-to-ask-before-you-choose\"><\/span>Questions to ask before you choose<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Use this list when comparing offers:<\/p>\n<ol>\n<li>What exactly is the security, and what happens to it if I miss a payment?<\/li>\n<li>Is a personal guarantee required? For the full amount or a share?<\/li>\n<li>What is the total cost, including interest and fees, over the whole term?<\/li>\n<li>Is there a capital repayment holiday, and how long does it last?<\/li>\n<li>What percentage of the franchise cost will the lender fund?<\/li>\n<li>Are there early repayment charges if I want to clear the loan sooner?<\/li>\n<li>How quickly can funds be released, relative to my franchise start date?<\/li>\n<\/ol>\n<p>If an answer is vague, ask for it in writing.<\/p>\n<h2 id=\"build-a-funding-plan-not-a-single-loan\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"build-a-funding-plan-not-a-single-loan\"><\/span>Build a funding plan, not a single loan<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Most buyers combine sources: personal savings, a bank loan, perhaps a Start Up Loan, and sometimes local support. Our guides cover each layer in more depth:<\/p>\n<ul>\n<li><a href=\"https:\/\/franchiselocal.co.uk\/news\/franchise-loan-types\" target=\"_blank\" rel=\"noopener\">Franchise loan types: the complete UK guide<\/a><\/li>\n<li><a href=\"https:\/\/franchiselocal.co.uk\/news\/franchise-funding-options-list-choose-right-uk-finance\" target=\"_blank\" rel=\"noopener\">Franchise funding options list<\/a><\/li>\n<li><a href=\"https:\/\/franchiselocal.co.uk\/news\/smart-ways-to-finance-a-uk-franchise-as-a-new-owner\" target=\"_blank\" rel=\"noopener\">Smart ways to finance a UK franchise as a new owner<\/a><\/li>\n<li><a href=\"https:\/\/franchiselocal.co.uk\/news\/funding-franchise-purchase-uk\" target=\"_blank\" rel=\"noopener\">Funding a franchise purchase in the food sector<\/a><\/li>\n<\/ul>\n<p>Grants rarely cover the full cost. Our piece on <a href=\"https:\/\/franchiselocal.co.uk\/news\/franchise-grants-uk\" target=\"_blank\" rel=\"noopener\">local franchise grants<\/a> explains why there is no national scheme and where smaller local awards may appear.<\/p>\n<h2 id=\"find-a-franchise-that-fits-your-budget\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"find-a-franchise-that-fits-your-budget\"><\/span>Find a franchise that fits your budget<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Funding is easier to plan once you know the investment level. On Franchise Local you can filter UK opportunities by price, industry, lifestyle and location, so your search starts with franchises that match what you can borrow and invest. Browse <a href=\"https:\/\/franchiselocal.co.uk\/trending\" target=\"_blank\" rel=\"noopener\">trending franchise opportunities<\/a> to see what other buyers are looking at, or explore <a href=\"https:\/\/www.franchiselocal.co.uk\/industries\/loans-franchises\/\" target=\"_blank\" rel=\"noopener\">loans franchises<\/a> if finance itself interests you as a business. Submit an enquiry on any listing to speak to the franchisor directly and ask for the full cost breakdown.<\/p>\n<h2 id=\"faq\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"faq\"><\/span>FAQ<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3 id=\"is-a-secured-or-unsecured-franchise-loan-better\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"is-a-secured-or-unsecured-franchise-loan-better\"><\/span>Is a secured or unsecured franchise loan better?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Neither is better in every case. Secured loans are generally cheaper and can reach larger amounts, but you risk the asset. Unsecured loans are typically more expensive and often need a personal guarantee, but they are an option when you have few assets to offer.<\/p>\n<h3 id=\"can-an-unsecured-franchise-loan-still-put-my-home-at-risk\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"can-an-unsecured-franchise-loan-still-put-my-home-at-risk\"><\/span>Can an unsecured franchise loan still put my home at risk?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It can. An unsecured business loan may require a personal guarantee, which makes you personally liable if the business cannot repay. Check what the guarantee covers and for how much, and consider legal advice before you sign.<\/p>\n<h3 id=\"can-i-get-a-start-up-loan-to-buy-a-franchise\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"can-i-get-a-start-up-loan-to-buy-a-franchise\"><\/span>Can I get a Start Up Loan to buy a franchise?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Possibly. The Start Up Loan is open to people in the UK who have or plan to start a UK-based business trading for less than five years, and it covers \u00a3500 to \u00a325,000 at a fixed 7.5% per year. You must pass a credit check, and some business types are excluded, so confirm your franchise qualifies.<\/p>\n<h3 id=\"how-much-of-a-franchise-can-a-bank-fund\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"how-much-of-a-franchise-can-a-bank-fund\"><\/span>How much of a franchise can a bank fund?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It depends on the lender and the brand. One major bank states it can fund up to 70% of approved franchise costs, so you should expect to contribute the rest yourself.<\/p>\n<h2 id=\"sources\" tabindex=\"-1\"><span class=\"ez-toc-section\" id=\"sources\"><\/span>Sources<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.british-business-bank.co.uk\/sites\/g\/files\/sovrnj166\/files\/2026-01\/making-business-finance-work-for-you-expanded.pdf\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Making business finance work for you, British Business Bank<\/a><\/li>\n<li><a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/business-loans\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Business loans, British Business Bank<\/a><\/li>\n<li><a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/guide-personal-guarantees-business-borrowing\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">A guide to personal guarantees for business borrowing, British Business Bank<\/a><\/li>\n<li><a href=\"https:\/\/www.british-business-bank.co.uk\/business-guidance\/guidance-articles\/finance\/start-up-loan\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Start Up Loan, British Business Bank<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/apply-start-up-loan\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Apply for a Start Up Loan, GOV.UK<\/a><\/li>\n<li><a href=\"https:\/\/www.barclays.co.uk\/business-banking\/sectors\/franchising\/\" rel=\"nofollow noopener noreferrer\" target=\"_blank\">Franchising, Business Banking, Barclays<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Secured or unsecured franchise loan? Compare security, cost, personal guarantees, eligibility and risk, so you can pick the right UK funding for your franchise.<\/p>\n","protected":false},"author":8,"featured_media":34678,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[29],"tags":[],"class_list":["post-34677","post","type-post","status-publish","format-standard","has-post-thumbnail","category-tips-advice"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2026\/10\/1792987839528_Founder-comparing-franchise-loan-paperwork.webp","_links":{"self":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts\/34677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/comments?post=34677"}],"version-history":[{"count":1,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts\/34677\/revisions"}],"predecessor-version":[{"id":34681,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts\/34677\/revisions\/34681"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/media\/34678"}],"wp:attachment":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/media?parent=34677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/categories?post=34677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/tags?post=34677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}