The SBA Franchise Directory Is Back. Now What?

Here’s how franchisors can protect their SBA eligibility and increase the likelihood that candidates’ loans get approved.

In May 2023,  the U.S. Small Business Association (SBA) announced it was doing away with the SBA Franchise Directory, sparking concerns for franchisors looking to grow their brands and entrepreneurs who needed loans to help them become business owners. 

The SBA Franchise Directory, a list of franchise brands eligible for SBA financial assistance, served as a quick confirmation that a franchisee met the SBA’s affiliation standards for loans. With its elimination, lenders could no longer rely on the directory as part of their due diligence and underwriting process when making loans to franchisees. That meant that the responsibility fell on lenders to ensure that franchisees met the necessary criteria for SBA financing.

Now, the SBA Franchise Directory is back. As of June 1, 2025 the SBA will be implementing a new Standard Operating Procedure (SOP) that will have a direct impact on franchise financing. 

What the Return of the SBA Franchise Directory Means

After the initial demise of the SBA Franchise Directory, lenders had the alternative to consult FRANdata’s Franchise Registry, which connects over 9,000 lenders to every franchise in the FRANdata database, to determine if a franchise brand met program requirements for eligibility. 

FRANdata is working with the SBA and lenders to ensure that franchise brands on the Franchise Registry are prepared to meet the new requirements.

The SBA will officially return as the primary tool lenders use to determine franchise eligibility, with more rigorous standards. FRANdata has outlined the major changes affecting certification and compliance to help franchisors navigate the new rules.

Two of the major changes coming are: 

1. Tighter review process. Franchisors will be required to sign a new SBA Certification when they submit their FDD.

2. Older SOP rules related to eligibility being restored. This requires passive business models to show ownership and active operational management, requires franchisees to certify that they serve men and women, and scrutinizes franchisor-employed managers.

How to Increase Candidates’ Chances of Getting a Loan

Entrepreneurs will always need loans to open or scale businesses, and banks will continue to lend. According to data from the Federal Reserve, 43% of lenders apply for loans at large banks and another 36% apply at small (local/community) banks. Overall, the percentage of applicants receiving all the funding they applied for has decreased.

In addition to taking the necessary steps to protect your brand’s SBA eligibility, there are other things you can do to increase candidates’ access to funding.

Show Them How to Present a Strong Business Plan

A well-developed business plan should include the candidate’s goals, strategies, and financial projections, and demonstrate that the candidate has a clear understanding of the local market, competition, market share opportunity, and profitability potential. FBR offers this free Franchise Financial Workbook to share with candidates to help them estimate both the start-up costs and the long-term potential return on investment (ROI) of their business. There are also free business plan templates available from sources like the SBA, Canva, and Hubspot.

Encourage Candidates to Compare Lenders

All loans are not equal, and it’s not just about the rate and fees. Coach candidates on what to ask about loan terms and repayment options. What additional services or resources do they offer that franchisees need…education materials, networking opportunities, or business advisory services? Candidates should always check the lender’s reputation and customer service through online reviews, and get multiple quotes to help them negotiate the terms and rates offered.

Provide Background for Candidates to Share with Lenders

Franchising is a model designed to deliver the same model and results, regardless of market. Sharing details of your company’s history, success rate, and support offered helps candidates demonstrate how investing in your franchise sets them up for success before the doors even open.

Give Candidates Your Satisfaction Summary Report to Include in Their Package

The more information that’s included in the package for the bank to review, the more likely lenders will feel risks are mitigated and approve the loan. The franchise’s FDD and bank credit report tell the story with numbers, but the summary report tells the “people story”. An independent third-party report showing how franchisees rate the brand on financial opportunity, training and support from the franchisor, and strength of the leadership add credibility to the financial documents. (Here’s a sample of FBR’s summary reports. If you don’t have one, contact us to learn more about our data and reporting.)

Refer Candidates to a Trusted Lending Partner

FBR partners with a trusted financing partner that can pre-qualify candidates for an unsecured loan in minutes. They are experts in franchising and offer complimentary consultations. Share this link with candidates to schedule an appointment.

By providing candidates with as many tools as possible to reinforce unit profitability and current franchisee satisfaction—the most important indicators of future success—you can help increase their chances of getting a loan more quickly AND start the franchisee-franchisor relationship off on a positive note! Schedule a free 10-minute demo to see the tools FBR has available to assist you.

FAQs About the New SBA Franchise Directory

What is the SBA Franchise Directory?
The SBA Franchise Directory is a centralized place for lenders to check a franchise’s eligibility for financing and determine whether to approve SBA loans. A franchise must be listed for its franchisees to qualify for funding.

What is the cost to be listed in the SBA Franchise Directory?
There is no cost for franchises to be listed in the Franchise Directory.

What is the SBA Certification Requirement?
Franchisors will have to sign a new certification when they submit their FDD. The intent is to link the brand’s franchise disclosure directly to SBA eligibility.

What is the deadline for SBA Certification?
Brands already on the SBA Franchise Directory must submit a new signed certification by July 31, 2025.

What if a franchisor misses the deadline for SBA Certification?
Franchise brands that do not submit the signed certification by July 31, 2025 will be removed from the SBA Franchise Directory and will not be eligible for SBA financing.

How many franchisors need to submit the new SBA Certification?
Approximately 8,000 franchise brands need to submit certifications by July 31, 2025 or risk being removed from the SBA Franchise Directory.

What happens between now and the July 31 SBA Certification deadline?
Franchisors already listed on the SBA Franchise Directory will operate under temporary procedures until July 31, which includes a note in the listing indicating the updated certification is pending.

What is FRANdata doing to assist with SBA Certification?
FRANdata is working directly with the SBA to submit applications for existing Franchise Registry members, including pre-submission vetting of the franchisor’s FDD and business model, certification form preparation, and eligibility risk mitigation.

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