SBA 7(a) Q&A
Short answer
Yes, acquiring an existing franchise location is a common and eligible use of an SBA 7(a) loan, provided the franchise is on the SBA Franchise Directory or individually reviewed.
The SBA maintains a Franchise Directory of eligible franchise systems. If the franchise system is listed, the acquisition of an existing location is streamlined. If not, the franchise agreement must be submitted for individual review by the SBA to ensure it meets eligibility requirements (e.g., no undue franchisor control, reasonable fees).
You want to buy an existing Subway restaurant for $400,000. Since Subway is on the SBA Franchise Directory, your acquisition would generally be eligible for an SBA 7(a) loan, assuming you meet all other borrower and business eligibility criteria.
Insider move
Lenders verify the franchise's eligibility on the SBA Directory and review the franchise agreement for any clauses that could impact the borrower's independent operation or the lender's ability to collateralize and liquidate assets.
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 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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.
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