{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-finance-a-franchise-if-it-s-not-on-the-sba-franchise-directory","api_url":"https://dealroom.so/api/public/questions/can-an-sba-7-a-loan-finance-a-franchise-if-it-s-not-on-the-sba-franchise-directory","question":"Can an SBA 7(a) loan finance a franchise if it's not on the SBA Franchise Directory?","topic":"Franchise Eligibility","audience":"lender","bot_mode":"lender","short_answer":"Yes, a franchise not listed on the SBA Franchise Directory can still be financed if the lender submits the franchise agreement and related documents for a review to determine eligibility.","rule":"While the SBA Franchise Directory lists pre-approved franchise systems, a franchise not on the list can still be eligible. The lender must submit the franchise agreement, disclosure document, and any other relevant agreements to the SBA for a review to ensure it meets all eligibility requirements, particularly concerning the 'control' clause which stipulates that the franchisor cannot have undue control over the franchisee's operations.","example":"A borrower applies for a loan to open a new emerging franchise concept not yet on the directory. The lender gathers the Franchise Disclosure Document (FDD) and the Franchise Agreement and submits them to the SBA for a formal review of eligibility.","what_lenders_check":"Lenders must be diligent in their review of franchise agreements to identify any ineligible clauses, particularly those granting excessive franchisor control. The SBA's review process can add time to the loan approval timeline, and the loan may be denied if the agreement is deemed non-compliant.","required_facts":["Franchise Directory","Franchise agreement review","Control clause","Eligibility determination","SBA review process"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SBA Document Search"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"SBA Document Search","url":"https://www.sba.gov/documents"}],"related_questions":[{"question":"What specific requirements apply to a franchise system for SBA 7(a) loan eligibility?","url":"https://dealroom.so/for-lenders/questions/what-specific-requirements-apply-to-a-franchise-system-for-sba-7-a-loan-eligibility"},{"question":"What is the lender's process for submitting an unlisted franchise agreement for SBA eligibility review?","url":"https://dealroom.so/for-lenders/questions/what-is-the-lender-s-process-for-submitting-an-unlisted-franchise-agreement-for-sba-eligib"},{"question":"How does the SBA define 'undue control' by a franchisor that could render a franchise ineligible for 7(a) financing?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-undue-control-by-a-franchisor-that-could-render-a-franchise-inelig"},{"question":"What issues in a franchise agreement typically lead to a determination of 'undue control' by the franchisor?","url":"https://dealroom.so/for-lenders/questions/what-issues-in-a-franchise-agreement-typically-lead-to-a-determination-of-undue-control-by"},{"question":"What process must a lender follow if a franchise applicant's agreement is not listed on the SBA Franchise Directory?","url":"https://dealroom.so/for-lenders/questions/what-process-must-a-lender-follow-if-a-franchise-applicant-s-agreement-is-not-listed-on-th"},{"question":"What specific provisions in a franchise agreement, if present, would render a franchise ineligible for 7(a) financing?","url":"https://dealroom.so/for-lenders/questions/what-specific-provisions-in-a-franchise-agreement-if-present-would-render-a-franchise-inel"}],"related_terms":[{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"},{"term":"SBA 7(a) loan guaranty","url":"https://dealroom.so/glossary/sba-7-a-loan-guaranty"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"Standard 7(a) loan","url":"https://dealroom.so/glossary/standard-7-a-loan"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-finance-a-franchise-if-it-s-not-on-the-sba-franchise-directory","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}