SBA 7(a) Q&A
Short answer
Yes, an SBA 7(a) loan can finance the initial franchise fee and other related start-up costs for both new and existing franchises.
The initial franchise fee, which is a one-time payment to the franchisor for the rights to operate under their brand, is considered an eligible use of SBA 7(a) loan proceeds. This also extends to other initial costs such as training fees or initial inventory, as long as they are reasonable and necessary for the business.
If you are acquiring a franchise for $500,000, and the initial franchise fee is $35,000, this $35,000 can be included as part of your total SBA 7(a) loan amount, alongside the purchase of existing assets and working capital.
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.
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