SBA loan basics
Short answer
If a franchise is not on the SBA's Franchise Directory, it doesn't mean it's automatically ineligible. The lender can submit the franchise agreement to the SBA for review and determination of eligibility.
Franchises are generally eligible for SBA financing, but the franchise agreement must comply with SBA's specific terms regarding undue control. The SBA maintains a Franchise Directory for systems that have already been reviewed and approved. If a franchise is not listed, the lender must submit the franchise agreement and other relevant documents to the SBA's Franchise Review Unit for individual review. This process determines if the franchisor exerts "undue control" over the franchisee, which would render the franchise ineligible.
Sarah wants to buy a new smoothie franchise that isn't on the SBA directory. Her lender collects the franchise agreement and submits it to the SBA for review. If the SBA determines the agreement does not contain "undue control" clauses, the franchise becomes eligible for the loan.
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
FAQ Related to Recent SBA Procedural Notices
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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