SBA 7(a) Q&A
Short answer
If a franchise is not on the SBA Franchise Directory, the lender must submit the franchise agreement for SBA review and approval.
The SBA maintains a Franchise Directory of approved franchise systems. If a franchise is not listed, the lender must submit a copy of the entire franchise agreement, including all exhibits and amendments, to the SBA for a review of its eligibility. The SBA will analyze the agreement to ensure it meets its lending criteria, particularly regarding the franchisor's control over the franchisee and potential affiliation issues.
A buyer wants to acquire a coffee shop franchise that is a well-known brand but not on the directory. The lender submits the full franchise agreement to the SBA. The SBA reviews it and determines it meets eligibility requirements, allowing the loan to proceed, or identifies issues that require amendments.
Insider move
Lenders prefer franchises on the directory for streamlined processing. For unlisted franchises, they must carefully review the agreement for problematic clauses (e.g., franchisor's undue control, unreasonable termination clauses) that could jeopardize SBA eligibility or the business's viability.
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 2026-06-14. 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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