For SBA lenders
Short answer
If a franchise is not on the SBA Franchise Directory, the lender must submit the franchise agreement and related documents to the SBA for review and eligibility determination.
The SBA maintains a Franchise Directory of pre-approved franchise systems. If a franchise is not listed, it means the SBA has not yet reviewed or determined its eligibility. The lender must submit the Franchise Agreement, including all addenda, and any other relevant agreements to the SBA for a review to ensure it meets SBA's eligibility requirements, particularly concerning franchisor control.
A borrower applies for a 7(a) loan to open a new concept smoothie bar franchise not yet listed on the SBA Directory. The lender collects the full franchise agreement, disclosure documents, and any related agreements and submits them to the SBA for an eligibility determination before proceeding with underwriting.
Insider move
Lenders must ensure all required documents are submitted and carefully review the franchise agreement for any clauses that might violate SBA's 'no control' rule, where the franchisor retains too much control over the borrower's business operations, potentially impacting eligibility.
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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