SBA loan basics
Short answer
Yes, SBA 7(a) loans are commonly used to purchase franchise businesses, provided the franchise is approved by the SBA and meets all other eligibility requirements.
The SBA maintains a Franchise Directory of pre-approved franchise systems. If a franchise is listed, it simplifies the eligibility review process. If not listed, the franchise agreement must be reviewed by the SBA to ensure it complies with SBA lending policies.
David wants to buy a well-known sandwich shop franchise. Because this franchise is on the SBA Franchise Directory, his lender can quickly verify its eligibility for an SBA 7(a) loan.
Insider move
Lenders must verify the franchise's eligibility, either through the SBA Franchise Directory or by submitting the franchise agreement for review, to ensure the business structure is acceptable for the SBA program.
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.
More on what it can be used for
Terms in this answer
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