Securing franchise loans is one of the most important steps in expanding or strengthening your business. Whether you’re building a new location, acquiring additional stores, or refinancing existing debt, the loan you choose will directly impact your cash flow, growth potential, and long-term success.

At IRH Capital, we’ve helped thousands of franchisees and business owners navigate the financing process. To set yourself up for success, here are three critical questions to ask before you take on your next loan:

1. Does this loan align with my growth strategy?

Every loan should serve a defined purpose. Are you financing a new build to break into a fresh market, acquiring existing stores to strengthen your territory, or renovating current locations to stay in line with brand standards? Each goal requires a different approach to structuring the loan.

• A new store build may benefit from longer repayment terms since it takes time to ramp up revenue.

• An acquisition loan may need more flexible structures to account for the performance of existing operations.

• A remodel loan might prioritize speed and ease of funding, since construction timelines can be tight.

Tip: Make sure the loan terms (term length, structure, and repayment schedule) align with your revenue projections and the growth path you’re targeting. A mismatch can create cash flow strain instead of fueling your success.

2. What are the total costs of this loan?

It’s natural to focus on the interest rate, but that’s just one part of the picture. The true cost of borrowing includes:

• Origination and documentation fees

• Prepayment penalties

• Amortization structure (how principal and interest are spread across payments)

• Flexibility for refinancing in the future

Some loans may appear attractive at first glance but end up being more expensive once you factor in fees and restrictions.

Tip: Always ask your lender for a complete cost breakdown: principal, interest, fees, and prepayment terms. Transparency here helps you make informed comparisons and avoid unpleasant surprises.

3. How will this loan affect my cash flow?

Cash flow is the lifeline of every business. A loan that looks manageable on paper could become a burden if repayment schedules don’t align with your revenue cycles or seasonal fluctuations.

For example, if your franchise has stronger revenue during summer months or peak seasons, but payments are structured as rigid monthly installments, you may feel unnecessary strain during slower periods.

Tip: Review how your repayment schedule fits into your operating expenses, payroll, and vendor obligations. 

Final Thoughts

Asking the right questions before signing a loan agreement ensures you’re making smart financing decisions that strengthen your franchise today while preparing you for sustainable growth tomorrow.

At IRH Capital, we specialize in customized franchise financing solutions. From single-unit operators to multi-unit franchisees, our team is committed to delivering clarity, transparency, and confidence in every step of the lending process.

Ready to explore your options? Learn more about our financing programs and see how we can help you take the next step in your franchise journey.