TOOLS

Franchise Business Loan ^Calculator

The Franchise Business Loan Calculator helps potential franchise owners estimate the monthly loan repayments and total interest costs involved in financing a franchise purchase. It is designed for entrepreneurs who want to assess affordability before committing to a franchise agreement. Many franchisees still consult platforms or brokers such as Funding Agent to verify calculations and explore lender options. For more about franchise finance, see franchise finance options or read the detailed franchise definition.

Secure up to £500,000 in Business Finance with Funding Agent.

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Quick and easy application process
Loan disbursed within 24 hours
No additional charges for early repayment

How To Use The Franchise Business Loan Calculator

Input loan details

Enter the franchise purchase price, any deposit amount, the loan term in years, and the annual interest rate. If fees are added to the loan, include these in the total loan amount. This ensures accurate monthly repayment figures. Learn more about making loan applications on the business loans guide.

Review instant outputs

The calculator shows the fixed monthly repayment, total amount repayable, and an estimate of the debt service cover ratio (DSCR). Watch the figures update live as you change inputs, so you can analyse different scenarios. See the debt ratio explanation for related cash flow assessment.

Adjust and export

Try varying the loan term or deposit size to understand how repayments affect your cash flow. When ready, download or copy the results to discuss with your accountant, business partners or broker. For more on preparing to borrow, visit the lenders directory.

^Benefits of Using the Franchise Business Loan Calculator

Performing quick calculations allows you to understand if your planned franchise can manage monthly loan repayments without strain, before incurring legal or brand commitment fees. This saves time and helps prioritise affordability considerations early. Additionally, it supports comparison of various repayment terms to improve lender readiness. See further details at franchise finance for small businesses and business loan options.

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How Franchise Business Loan Calculations are Done

Monthly repayment formula

Uses amortisation to find fixed monthly payment.

Monthly repayment formula

The monthly payment is calculated using the formula: Payment = P × r × (1 + r)^n ÷ [(1 + r)^n − 1], where P is the loan amount, r the monthly interest rate (annual rate divided by 12), and n the total number of months. This amortisation formula spreads capital and interest evenly, ensuring fixed monthly payments.

Total interest cost

Sum of all repayments minus principal.

Total interest cost

The total interest cost equals the total repayments minus the original loan amount: Total Interest = (Monthly Payment × n) − P. This shows how much interest will be paid over the loan term, based on fixed monthly payments and number of months.

Debt service cover

Measures cash flow sufficiency for repayments.

Debt service cover

The Debt Service Cover Ratio (DSCR) = EBITDA ÷ Annual Debt Service. EBITDA represents earnings before interest, tax, depreciation, and amortisation. Annual Debt Service is the monthly repayment multiplied by 12. Lenders typically require a DSCR above 1.25 to approve franchise loans, indicating your business generates sufficient cash flow to cover debt.

Understanding Your Franchise Business Loan Calculator Results

Spot affordability gaps

Check that the monthly repayment fits within your projected franchise profits and allows enough surplus for wages, stock, operational costs, and royalties. This ensures your business can sustain debt repayments in practice. For context, review typical franchise finance requirements.

Test sensitivity

Adjust interest rates or shorten the loan term to see how monthly repayments increase. UK franchise loans commonly run from three to seven years with rates between 6 and 10 percent. Testing sensitivity helps prepare for varying lender offers or economic conditions. Learn about interest rates here.

Note hidden costs

The calculator does not include arrangement fees, early repayment penalties, or potential variable rate changes. Always check the lender’s key facts sheet and contract details before committing to a loan. Understand common additional fees on the down payment and fees guide.