SBA 7(a) Q&A
Short answer
For a franchise to be listed on the SBA Franchise Directory, its franchise agreement must comply with specific SBA addendum requirements, including non-restrictive language that allows the franchisee operational freedom.
The SBA reviews franchise agreements to ensure that the franchisee, as the borrower, has sufficient control over the business's operations to qualify as a small business. Agreements with overly restrictive terms that limit independence may prevent listing.
A franchise agreement requiring an SBA addendum to clarify that the franchisee, not the franchisor, controls essential business decisions like hiring and firing, would be reviewed for compliance before being added to the directory.
Insider move
Lenders prefer franchises on the SBA Directory as it simplifies eligibility review. For unlisted franchises, lenders must perform extensive due diligence on the franchise agreement to ensure SBA compliance, which adds time and complexity.
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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