"Credit looks great. DSCR clears. But we can't approve this. Your brand isn't on the SBA Franchise Directory." Tavi (a made-up founder) had already paid a $45,000 franchise fee to Bramblequill Bowls (a made-up brand) and signed a lease. Her $468,000 SBA 7(a) loan stopped moving with one sentence.
This is general information, not legal or financial advice. Confirm every rule against the current SOP and your lender before you sign anything.
The one tip
Before you pay a franchise fee or sign a lease, look up the exact brand, and the exact agreement you'll sign, on the SBA Franchise Directory.
Under SBA SOP 50 10 8.1 (effective October 1, 2026), if your brand meets the FTC definition of a franchise, it must be on the Directory to get SBA financing. If it isn't, a lender without delegated authority can't even submit your application to SBA. A PLP lender, one with delegated authority, can't approve it either.
Being "kind of" listed doesn't count. The lender has to confirm that the brand name, and where it applies the type of agreement, match the Directory listing. So if the listing names one kind of agreement and you signed a different one, such as a newer kiosk or satellite deal, it may not match.
It reaches past burger chains, too. License, dealer and jobber deals can count as franchises if SBA decides they fit the FTC definition. Gas stations under fuel supply agreements are covered by name in the SOP.
To get a brand listed, someone sends its agreement, its disclosure document and every other document franchisees sign to franchise@sba.gov, with the franchisor's contact info if they aren't the franchisor. If SBA finds the brand eligible, the franchisor has to sign an SBA Franchisor Certification before it's listed. SBA reviews new brands in the order they arrive, and the SOP doesn't give a timeline. You can push, but only the franchisor can sign.
Worked example
Here's Tavi's project, using made-up but real-sized numbers:
- Franchise fee: $45,000
- Build-out: $310,000
- Equipment: $105,000
- Opening inventory and working capital: $60,000
- Total project cost: $520,000
She's a startup, so SOP 50 10 8.1 requires an equity injection of at least 10% of total project cost, which is $52,000. The $45,000 fee she already paid may count toward that. SOP 50 10 8.1 lets eligible prepaid expenses count as equity once the lender verifies them with paid invoices, canceled checks or bank statements. The SOP doesn't name franchise fees either way, so it's the lender's call whether hers is eligible. If the lender counts it, she only needs $7,000 more in cash. The loan is $468,000.
At an assumed 10.25% rate over an assumed 10 years (an example, not a quote), the payment is about $6,250 a month ($6,249.63), or about $75,000 a year. SBA wants projected debt service coverage of at least 1.15 within two years for a startup, so her projections need about $86,245 a year in cash flow available for debt. Her plan shows $97,000, a DSCR of about 1.29.
Every number clears. None of it matters until the brand is listed. Meanwhile her $45,000 fee is paid, the lease clock is running, and the loan has nowhere to go.
Do this week
Download the SBA Franchise Directory spreadsheet from SBA.gov and search the exact brand name on your franchise agreement, not the name on the sign.
Read the listing's notes. Check whether it names a type of agreement and whether that matches the one you'll sign.
If the brand isn't listed, email the franchisor's development contact. Ask in writing whether they've sent their documents to franchise@sba.gov and signed the Franchisor Certification.
Ask your lender to confirm the listing in writing before you pay a fee or sign a lease.
If you've already paid the franchise fee, keep the invoice and bank statement that show it cleared. Your lender needs them before it can count the fee toward your injection.
Running several brands under one roof? Every agreement that meets the FTC franchise definition has to be listed, or the loan can't proceed.
Sources: SBA SOP 50 10 8.1 (Section A, Ch. 1, Franchises: the SBA Franchise Directory, use of the Directory by SBA Lenders, adding brands; Section B, Ch. 1, Standard 7(a) equity injection for start-ups, sources of equity injection and debt service coverage), download from https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs ; SBA Franchise Directory, https://www.sba.gov/document/support-sba-franchise-directory ; SBA guide to the Directory and brand review, https://www.sba.gov/counseling/plan-your-business/#franchise-directory ; FTC franchise definition, 16 CFR Part 436, https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436
Verified against SOP 50 10 8.1 text and the SBA Franchise Directory page: October 12, 2026.