SBA Franchise Directory (Updated 2022)

SBA Franchise Directory

I’ve been seeing a lot of ads recently on franchisors that say they’re SBA-eligible. Essentially, the Small Business Administration says that it’s eligible for SBA loans without a set franchise, or even worse, SBA-approved. The SBA approved this franchise as a good business opportunity. In today’s video, we’re going to go through the importance of understanding what franchises are SBA-eligible. And how the SBA really determines the eligibility of a franchise.

Don't be seduced by a franchise ad that says the SBA approved this business opportunity. As if it was a direct endorsement from the Small Business Administration to that set franchise.

Essentially, all the SBA’s looking at is that there is a unique division between the franchisor and the franchisee. That it’s not a co-employment agreement or arrangement. And that these two entities aren’t operating together, essentially.

sba franchise directory
As for the SBA loan...

You have to have less than 500 employees. And depending on the structure of the agreement between the franchisor and the franchisee, the SBA could disqualify you. In the eyes of the SBA, you could be viewed as the same entity, the same business. And the SBA would count the jobs of those hundreds or more licensees or franchisees, making you ineligible for an SBA loan.

Effectively, the SBA is really just looking to see the franchise agreement and the franchise disclosure document and the information that the franchisor or the applicant looking for a 7(a) or 504 loan, it’s truly a franchise in the eyes of the FTC. And it’s really a separate business entity where the franchisee is leveraging the brand, the training, and the know-how from the franchisor, but it’s running its own independent capacity. That’s really important. I would say, 90, 95% of the time when the franchisor provides information to the SBA, it could be directed to the franchisee.

franchise specialists

Small Business Administration

Maybe it’s the first time there’s been an SBA loan and the whole franchise system that they’re getting approved. At times the SBA might require a waiver signed by the franchise brand to make that distinction even clearer.

But most of the time, the franchise is going to a be eligible for the 7(a) loan. You could use it to build out the location, and working capital, pay employees, and buy furniture and fixtures. Even the 504, which is generally used for real estate purchases, whether you’re developing your place of work with a franchise location from the ground up, or if you are going to be buying an existing location, like a condo office.

At Vetted Biz, we make it a lot easier for you. Every couple of weeks, the SBA is updating its directory. It’s a 20, 30-page PDF document that’s not easily sortable. At Vetted Biz, we’ve created a unique link. You can just go through it and see all the franchises that are SBA-eligible. And again, 9095% of the franchise brands are going to meet the criteria for an SBA loan. We have other videos that we’ve done with financial experts and financing specialists. If you’ve any doubt about the SBA loan process, I encourage you to take a look at some of those videos.

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