SBA 7(a) Q&A
Short answer
Yes, a relatively new franchise not yet on the SBA's registry can still be financed, but it requires the lender to submit the franchise agreement for SBA review.
Franchises must be on the SBA Franchise Directory or receive a 'determination of eligibility' from the SBA. For unlisted franchises, the lender must submit the franchise agreement to the SBA for review to ensure it does not contain any provisions that could be deemed 'undue control' by the franchisor, which would make it ineligible.
A buyer wants to acquire a new 'Smoothie Shack' franchise, which isn't on the SBA list. The lender submits the franchise agreement to the SBA. After review, the SBA determines it meets eligibility requirements, allowing the loan process to continue.
Insider move
Lenders are cautious with unlisted franchises due to the risk of eligibility issues. They carefully review franchise agreements for undue control clauses and may perform extra due diligence to ensure the franchise concept is viable before submitting it to the SBA.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. 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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