SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to finance the purchase of a new franchise location. The franchise must be on the SBA Franchise Directory or undergo an eligibility review.
The SBA supports financing for franchises, including new locations, provided the franchise system is approved by the SBA. Lenders will check the SBA Franchise Directory to confirm eligibility. If a franchise is not listed, the franchisor must submit an application and relevant documents for a review to determine eligibility before a loan can be approved.
An entrepreneur wants to open a new coffee shop franchise. If the coffee franchise is listed on the SBA Franchise Directory, they can apply for an SBA 7(a) loan to cover the franchise fees, build-out costs, equipment, and initial working capital.
Insider move
Lenders must verify the franchise's eligibility through the SBA directory. They also conduct due diligence on the specific franchise model, the borrower's experience, and the projected profitability of the new location.
SOP 50 10 - Lender and Development Company Loan Programs
SBA 7(a) Loans Overview
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.
More on what it can be used for
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