SBA 7(a) Q&A
Short answer
If a franchise is not listed on the SBA Franchise Directory, the lender must submit the franchise agreement and any required addenda to the SBA for a formal review of its eligibility.
For a franchise to be eligible for SBA financing, its agreement must comply with SBA regulations, ensuring the borrower maintains control over the business. If not on the directory, the SBA will review the specific agreement to confirm it meets these requirements. This process can add significant time to the loan application.
A buyer wants to acquire a new, emerging franchise concept. Since it's not on the directory, the lender compiles the franchise agreement and submits it to the SBA for a 3-4 week eligibility review before underwriting can fully proceed.
Insider move
Lenders must ensure the franchise agreement does not contain any provisions that restrict the borrower's control, such as unreasonable termination clauses or excessive franchisor control over daily operations, which would render it ineligible.
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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