SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to purchase a specific franchise territory, including the associated franchise fees, build-out costs, and initial working capital.
The SBA generally allows financing for franchises, provided the franchise is on the SBA's Franchise Directory or meets specific eligibility requirements. Purchasing a territory involves acquiring the rights to operate within that geographical area, which is an eligible business acquisition cost.
A borrower wants to open a new pizza franchise and needs to purchase the rights to a specific county for $50,000, plus another $200,000 for build-out and equipment. An SBA 7(a) loan can finance the $250,000 total project cost.
Insider move
Lenders must verify the franchise is on the SBA's approved list or meets their requirements. They also review the franchise agreement for any clauses that could impact the borrower's ability to repay or the lender's ability to secure collateral.
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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