SBA 7(a) Q&A
Short answer
For a franchise not on the SBA Franchise Directory, the lender must submit the franchise agreement to the SBA for review and approval of its eligibility. This process can add significant time to the loan application.
If a franchise is not listed on the directory, the lender must manually review the entire franchise agreement to ensure it complies with SBA affiliation rules and other eligibility requirements. This often involves sending the agreement to the SBA for a formal eligibility determination, which can extend the processing timeline considerably.
If you're buying a new or niche franchise that isn't on the directory, your lender will need to send the franchise disclosure document (FDD) and the franchise agreement to the SBA for an eligibility review. This could add several weeks or even months to your loan closing process.
Insider move
Lenders are concerned about the time and effort involved in a manual franchise review and the risk of the SBA deeming the agreement ineligible. They need to ensure the franchise relationship does not create an ineligible business structure or excessive control by the franchisor.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
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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