{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/what-if-my-business-is-purchasing-a-franchise-how-does-that-work-with-an-sba-7-a-loan","api_url":"https://dealroom.so/api/public/questions/what-if-my-business-is-purchasing-a-franchise-how-does-that-work-with-an-sba-7-a-loan","question":"What if my business is purchasing a franchise; how does that work with an SBA 7(a) loan?","topic":"Franchise Eligibility","audience":"new","bot_mode":"buyer","short_answer":"If your business is purchasing a franchise, the franchise must be listed on the SBA Franchise Directory or receive specific SBA approval to be eligible for a 7(a) loan.","rule":"The SBA maintains a Franchise Directory of approved franchise systems that have been reviewed for eligibility. If a franchise is not on this list, the lender must submit the franchise agreement to the SBA for review and determination of eligibility before the loan can be approved. This ensures the agreement doesn't contain clauses that violate SBA regulations.","example":"A borrower wants to buy a 'Burger Blast' franchise. The lender first checks the SBA Franchise Directory. If 'Burger Blast' is listed, the application can proceed normally. If not, the lender must send the franchise agreement to the SBA for review, which could add several weeks to the process.","what_lenders_check":"Lenders must confirm the franchise's eligibility to secure the SBA guaranty. They carefully review franchise agreements for any provisions that might limit the franchisee's control or create affiliation issues, which are critical for SBA eligibility.","required_facts":["SBA Franchise Directory","Franchise agreement review","SBA approval required","Eligibility check","Affiliation rules"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 121 - Small Business Size Regulations"],"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 121 - Small Business Size Regulations","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-121"}],"related_questions":[{"question":"What specific requirements apply to a franchise system for SBA 7(a) loan eligibility?","url":"https://dealroom.so/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/what-specific-provisions-in-a-franchise-agreement-if-present-would-render-a-franchise-inel"}],"related_terms":[{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-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":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"Lease with an option to purchase","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase"}],"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/sba-loans/basics/what-if-my-business-is-purchasing-a-franchise-how-does-that-work-with-an-sba-7-a-loan","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."]}