SBA 7(a) Q&A
Short answer
Yes, an SBA 7(a) loan can finance an initial franchise fee or a transfer fee associated with acquiring an existing franchise location.
Franchise fees and other initial costs associated with acquiring an eligible franchise (listed on the SBA Franchise Directory or individually approved) are considered eligible uses of SBA 7(a) loan proceeds. This includes upfront fees for the right to operate the franchise.
A buyer acquiring an existing 'Quick Coffee' franchise for $700,000 might include a $30,000 franchise transfer fee as part of the total SBA loan amount, in addition to the business purchase price.
Insider move
Lenders verify the franchise's eligibility through the SBA Franchise Directory. They ensure that all franchise-related fees are clearly identified, reasonable, and included in the total project cost for which the loan is requested.
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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