For SBA lenders
Short answer
The lender must submit the complete franchise agreement, the Franchise Disclosure Document (FDD), and any other related addenda to the SBA for a direct review. The SBA will then issue a determination on whether the agreement meets its eligibility requirements.
SBA-compliant franchise agreements must allow the franchisee sufficient independence in business operations and financial management. When a franchise isn't on the directory, the lender acts as the initial reviewer, then submits the full package to the SBA's Office of Franchise and Business Opportunity (OFBO) for a formal determination. This review ensures no restrictive clauses compromise the franchisee's control or create an ineligible affiliation.
A lender receives an application for a new 'Tech Repair Hub' franchise. The system is unlisted. The lender reviews the franchise agreement and FDD for common problematic clauses (e.g., franchisor requiring collateral on SBA loan, excessive control over pricing). Satisfied, the lender compiles all documents and submits them to the SBA for an official franchise eligibility opinion.
Insider move
Ensuring the franchise agreement is truly SBA-compliant is paramount. The lender must identify any potential issues that could lead to an ineligible business before SBA review, as an adverse determination could stop the loan process and result in wasted effort.
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
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