Subway is the Largest Single-Brand Restaurant Chain and the Largest Restaurant Operator in the World.
United Capital Source is proud to have provided small business loans to over 15 Subway franchisees throughout America.
Our committed and experienced lending team has assisted Subway franchisees from California, Michigan, Connecticut, and New York.
United Capital Source understands that Subway franchisees must make consistent and timely updates to marketing materials, menu boards, external signage, and merchandising. Similar to many franchise groups, Subway franchisees are required to purchase all foods and supplies from Subway. These demands often impact cash flow, and without suitable funding, franchise owners are at risk of not complying with their franchise requirements.
Understanding these specific Subway franchise requirements, our small business loan options include traditional term business loans, business lines of credit, factoring on receivables, and merchant cash advances.
Opening a Subway Franchise
Many aspiring entrepreneurs consider purchasing a franchise to realize their dream of having their own business. Subway is one of the most recognizable brands for those considering franchise ownership. Existing franchises often see significant profits.
Subway is seeking qualified candidates to open multi-unit franchises. Depending on various factors such as building type and construction, opening a Subway franchise can generally take between 4 and 12 months. The application and approval process usually takes three to four months to complete. Once your application is approved, you’ll sign a franchise disclosure document (FDD).
Subway franchise candidates must apply with details about their experience and financial situation. Subway prefers franchise candidates who have restaurant, business, or franchising experience. During the application process, you may work with a Subway Development Agent for support in choosing a location. Subway will help with site selection if you don’t have a preexisting property in mind. The franchise term for a Subway restaurant is 20 years.
All Subway franchisees are expected to complete a two-week training program that covers every facet of managing a Subway restaurant. The program includes both classroom and on-the-job training. The average Subway franchise generates approximately $493,000 in annual sales.
Most Subway franchises are projected to reach profitability and break even within the targeted 18-month period. The average profit for a Subway franchise owner is around $93,100 each year. Multi-unit Subway franchisee owners typically earn anywhere from $150,000 to $250,000 annually.
Cost of a Subway Franchise
The estimated initial investment for a Subway restaurant ranges from $199,135 to $536,745, depending on various factors. The initial franchise investment can reach between $250,000 and $400,000. The initial franchise fee for each Subway franchise location is around $15,000. You will need to pay the initial franchise fee during the application process. Depending on various factors, it typically takes about 4 to 12 months to open a Subway franchise.
Financial requirements include at least $100,000 in liquid assets and a net worth of at least $150,000 to qualify as a franchisee. The minimum financial requirements to become a Subway franchisee include at least $150,000 in net worth and $100,000 in liquid assets. Subway requires franchisees to have a good credit score during the application process.
The ongoing costs of owning a Subway franchise include royalties, marketing fees, supplies, and food. Royalties amount to 8% of gross sales paid monthly to Subway. Marketing fees usually amount to 4.5% of gross sales paid annually to Subway. Inventory costs for a Subway franchise can run from $4,400 to $6,050 per month. Operational expenses for a Subway franchise can range from $7,500 to $15,000 per month, depending on various factors.
Subway Franchise Finance Options
Financing options for Subway franchises range from $25,000 to $100,000,000. For financing purposes, Subway franchises require a minimum of $100,000 in liquid assets. Given the startup costs, securing comprehensive financing is crucial for potential Subway franchise owners.
Financing options through independent lenders may include a variety of loans suitable for franchisees. Subway offers referral services to connect candidates with lender networks for franchise financing.
Small business owners have several financing options to consider to support or grow their existing Subway franchise.
Working Capital Loans
Working capital loans are among the most useful financing options for Subway franchise owners. They cover day-to-day operating expenses and typically have repayment periods of six to 12 months. Most working capital financing solutions are unsecured business loans.
Business Line of Credit
A business line of credit provides a flexible financing option to use funds as needed. Instead of a one-time lump sum payment, a business line of credit offers an available credit limit. You can draw funds to support your franchise at any time. You only pay interest on the funds you use.
Merchant Cash Advance
A merchant cash advance is one of the most accessible and fastest funding options for Subway owners. This option provides a lump sum of cash in exchange for a percentage of future debit or credit card sales, making it flexible for franchises.
Equipment Financing
Equipment financing is an excellent option for replacing or upgrading the necessary equipment for running a Subway, such as refrigerators, bread ovens, and prep tables. With equipment financing, the asset being financed is the collateral for the loan.
Commercial Real Estate Loans
Consider commercial real estate loans if you’re looking to expand locations. These loans are secured by the property used for the Subway franchise and generally have lower rates than unsecured loans. Franchisee loans offer financing options for approved franchise candidates, often with interest-only programs for the first two years.
SBA Loans
Consider SBA loans if you’re an established business owner with excellent credit. SBA loans can finance up to 90% of qualifying startup expenses for Subway franchises. SBA loans for Subway franchises range from $150,000 to $1 million at low fixed interest rates over extended periods. Term loans are small business loans paid back over two to five years with equal monthly payments.
What are the advantages of Subway Franchise Financing?
Securing Subway franchise financing has several advantages. With a proven business model, strong brand recognition, and wide franchise opportunities, Subway makes it easier for new franchisees to secure funding. Financing options allow you to successfully manage startup costs, cover operational expenses, and launch your restaurant location.
Some lenders offer interest-only periods, flexible monthly payments, and loan types tailored to the franchise model. SBA loans in particular offer long repayment terms and lower rates, helping reduce risk for franchise owners. Equipment financing can also cover the full cost of kitchen equipment, POS systems, and furnishings needed to open your Subway store.
What are the disadvantages of Subway Franchise Financing?
While franchise financing offers many benefits, there are potential drawbacks to consider. Subway franchise financing options may require collateral, personal guarantees, or a high credit score. SBA loans have a long and detailed application process, which may slow down the process of opening your Subway franchise.
You’ll also want to consider ongoing costs, including royalties and advertising fees based on gross sales. Managing debt from startup loans alongside these ongoing expenses can strain your cash flow, especially for new franchisees who have yet to reach profitability.
Subway Franchise Financing Pros & Cons
Pros:
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Financing helps manage startup costs, operational expenses, and equipment purchases.
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SBA loans offer low fixed interest rates and extended repayment terms.
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Interest-only payment options may be available in early loan periods.
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Equipment financing can cover the full cost of kitchen equipment, POS systems, and furnishings.
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Flexible loan structures tailored to franchise business needs.
Cons:
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Some loans require collateral, personal guarantees, or high credit scores.
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SBA loan applications involve a time-consuming and complex approval process.
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Ongoing fees (e.g., 8% royalty, 4.5% advertising) increase the monthly financial burden.
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Managing startup loan repayments alongside operational costs can strain early cash flow.
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Delays in funding or approval could slow down the grand opening timeline.
How To Apply for Subway Business Loans:
The amount of paperwork required depends on the product you choose. Funds can be approved and distributed for most products within 1-3 business days. Here’s how to apply:
Step 1: Choose the Right Product
The first step is choosing the most sensible solution to the problem at hand. This should require some research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term expense? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Step 2: Gather Your Documents
Here are the documents and information required for Franchise Financing Loans:
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Driver’s license
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Voided business check
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Bank statements from the past three months
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Invoice for equipment (for Equipment Financing)
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Credit card processing statements from the past three months (for Merchant Cash Advance)
SBA loans require additional documents and information, such as financial statements. To learn what’s needed for the SBA-backed loans, visit our SBA loan page.
Step 3: Fill Out the Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Step 5: Receive Approval
If you’re approved, we’ll contact you within 24 hours. After closing, funds for most business financing products should appear in your bank account within 24 hours to one week.
Your Subway Business Loan Gets Set Up – Now What?
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
What If I’m Declined For a Small Business Loan?
If your application is declined, it’s possible that you applied for the wrong product to meet your cash flow needs. We would likely recommend a different product with a less hazardous repayment structure in this case.
Your application might also be declined if it is determined that you cannot afford to take on more debt at this time.
If your credit score is holding you back from accessing financing, consider working with a reputable credit repair service to raise your scores.
