SBA loan basics
Short answer
If your business is purchasing a franchise, the franchise must be listed on the SBA Franchise Directory or receive specific SBA approval to be eligible for a 7(a) loan.
The SBA maintains a Franchise Directory of approved franchise systems that have been reviewed for eligibility. If a franchise is not on this list, the lender must submit the franchise agreement to the SBA for review and determination of eligibility before the loan can be approved. This ensures the agreement doesn't contain clauses that violate SBA regulations.
A borrower wants to buy a 'Burger Blast' franchise. The lender first checks the SBA Franchise Directory. If 'Burger Blast' is listed, the application can proceed normally. If not, the lender must send the franchise agreement to the SBA for review, which could add several weeks to the process.
Insider move
Lenders must confirm the franchise's eligibility to secure the SBA guaranty. They carefully review franchise agreements for any provisions that might limit the franchisee's control or create affiliation issues, which are critical for SBA eligibility.
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
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 franchise eligibility
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