For SBA lenders
Short answer
If a franchise is not on the directory, the lender must review the franchise agreement and all related documents (e.g., addenda, disclosure documents) to ensure SBA compliance before submission, often with an SBA Addendum.
For a franchise system to be eligible for SBA financing, its agreements must comply with SBA requirements, particularly regarding the franchisee's control over the business. If not on the directory, the lender conducts an in-depth review of the franchise agreement to ensure no clauses restrict the franchisee's control or mandate specific vendors. An SBA Addendum often accompanies non-directory franchises.
A borrower applies for a 7(a) loan to acquire a new 'Green Smoothie Bar' franchise. The lender checks the SBA Franchise Directory and finds it's not listed. The lender then requests the full franchise agreement, FDD, and any addenda, reviewing them for problematic clauses before submitting the loan application with an SBA Addendum.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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