# Franchise Funding Requirements and Documents

> Franchise funding requirements by product: time in business, FICO, revenue, balances, NSFs and positions, plus franchise agreement, entity and royalty rules.

Source: https://mfebusinessloans.com/franchise-funding/requirements/ (Merchant Fund Express, updated 2026-10-21)

## The short answer

Merchant Fund Express publishes two requirement tiers. The line of credit and term loan ask for 3+ years in business, FICO 650+ and about $25,000 a month in revenue; revenue-based financing asks for 6+ months, FICO 600+ and $60,000 in verifiable revenue. Franchise owners are read the same way, with royalty and ad fund debits treated as recurring obligations.

## What applies to every franchise funding file?

Amount$25,000 to $5,000,000, sized from deposits and existing obligations
CreditScores from 500 are considered; 600+ opens better offers
StatementsAbout 3 months of business bank statements, as bank PDFs
Tax returnsNot needed for a typical first review; full financials usually above $250,000
Credit checkThe application starts with a soft pull
WhoAll 50 states; sole proprietors and ITIN applicants eligible; non-profits not eligible
These are the baseline for every Merchant Fund Express review. The product chosen then adds its own thresholds below. General context sits on the sitewide funding requirements page.

## What does Tier 1 (line of credit and term loan) require?

Requirement | Tier 1 published threshold |
Time in business | 3+ years |
FICO | 650+ |
Revenue | $300,000 a year or $25,000 a month, with 8+ deposits a month |
Average balance | $5,000 or 10% of monthly revenue |
Negative days | Max 3 a month and 9 in 6 months |
NSFs | Max 6 a month and 24 in 6 months |
Ownership | At least 50% held by the applicant |
Bankruptcy or foreclosure | None in the last 3 years |
Existing positions | At most 2; the term loan takes first position only, a line of credit can sit in second |
Pricing | Line of credit from 1% per month; term loan at 0% origination |
A franchise owner with a mature unit usually reads this tier first, and Merchant Fund Express prices it lowest. See the franchise line of credit for how a revolving limit fits seasonal stores.

## What does Tier 2 (revenue-based financing) require?

Requirement | Tier 2 (revenue-based) | Tier 1 for comparison |
Time in business | 6+ months | 3+ years |
FICO | 600+ | 650+ |
Revenue | $60,000 verifiable | $25,000 a month |
Balances | Minimum daily balance $800 | Average $5,000 or 10% of monthly revenue |
Negative days and NSFs | Max 5 | 3 negative days and 6 NSFs a month |
Existing positions | Up to 2 current advances | At most 2, position rules apply |
History | No open bankruptcies and no prior defaults | No bankruptcy or foreclosure in 3 years |
States | California and New York carry extra restrictions | All 50 states |
Revenue-based financing is not a loan: it is repaid from a share of future revenue, and Merchant Fund Express reviews it on the same three months of statements. It suits a newer unit, or an older one whose credit sits between 600 and 650.

## What about equipment financing?

Equipment financing has no separate published minimums, and we do not invent any. The review centers on the equipment itself: a vendor quote, the item's useful life, and the fact that the money goes to that purchase. The location's deposits still show whether the payment fits. Read franchise equipment financing for oven, cooler, lift and print press examples.

## How do the franchise agreement and entity structure matter?

Single entity, one unit: statements, application and franchise agreement (if requested) should all show the same legal name.
One entity, several units: one set of statements may carry all stores; the reviewer reads total deposits and total royalties.
One entity per unit: each entity is reviewed on its own statements, and the obligations of the others are counted.
Ownership: Tier 1 needs at least 50% ownership by the applicant, so partnership splits matter.
Sole proprietor operator: eligible; the personal name and business account must match.
Multi-entity owners should also read the multi-unit guide.

## How are royalties read in the review?

Royalty and advertising fund debits are normal recurring obligations. Whether the franchisor takes a percentage of sales or a flat monthly amount, the reviewer finds the debits on the statements, totals them, and sizes payment capacity after them. They are not a negative mark. Our page on royalty debits in a file shows a statement line by line.
Example: a unit deposits $80,000 in a month. Royalty and ad fund debits total $7,200, rent and other fixed costs $14,000, and an existing advance $4,000. The reviewer starts from roughly $54,800 of capacity before payroll and food or parts costs, not from the full $80,000.
Figures in this example are illustrations of the arithmetic, not an offer, quote or approval. Real terms depend on the file and the funder.

## What should you check before applying?

Time in business and FICO against the tier you want
Deposit count: 8+ a month for Tier 1
Negative days and NSFs in the last 6 months
Existing positions: no more than 2
Your document pack, using the documents checklist

## Keep reading

Documents for franchise funding: the practical upload pack by situation
Franchise funding hub: products and needs for existing owners
Existing positions: how current advances are counted
Credit score requirements: the sitewide credit detail

## Common questions

### Do I need 3 years in business for franchise funding?

Only for the line of credit and term loan. Revenue-based financing starts at 6 months in business with FICO 600+ and $60,000 in verifiable revenue.

### Is a 550 FICO enough for a franchise owner?

Scores from 500 are considered, but the published product tiers start at 600 for revenue-based financing and 650 for the line of credit and term loan.

### Will you ask for my franchise agreement?

It can be requested to confirm the entity, the unit and the fee structure. Have it ready, along with your bank statements.

### Do royalties lower the amount I can receive?

They are counted as recurring obligations, so capacity is measured after them. They do not count against you beyond that.

### Are there separate requirements for equipment financing?

No separate minimums are published. The review reads the vendor quote, the equipment's useful life and whether the location's deposits carry the payment.

Apply with Merchant Fund Express: https://merchantfundexpress.com/current-application.html?utm_source=mfebusinessloans.com&utm_medium=franchise&utm_campaign=franchise-funding&utm_content=requirements