For SBA lenders
Short answer
Yes, an existing franchise location not on the directory can be eligible, but it requires the lender to submit the franchise agreement for a full SBA review to determine its eligibility.
The SBA maintains a Franchise Directory to streamline the eligibility review for common franchise systems. If a franchise is not listed, the lender must submit the entire franchise agreement, including all addenda, for the SBA to review and determine if it meets the SBA's eligibility requirements, particularly regarding control of the franchisee.
A borrower wants to purchase an existing "Pizza Palace" franchise. The lender checks the Franchise Directory and finds it's not listed. The lender then submits the full franchise agreement, operations manual, and any other relevant documents to the SBA for a franchise eligibility review.
Insider move
The primary concern is ensuring the franchise agreement does not contain any provisions that would give the franchisor undue control over the franchisee, limiting the franchisee's operational independence. This can make the business ineligible for SBA financing.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on franchise eligibility
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day