The Small Business Administration (“SBA”) eliminated the SBA Franchise Directory (“Directory”) in 2023. Two years later, the SBA has reinstated the Directory (with modifications) effective June 1, 2025. The Directory lists franchised brands that meet SBA loan eligibility standards, streamlining the review of those businesses for banks and lenders and serving as a critical resource for determining franchisee eligibility for SBA loans.

Industry figures have strongly supported the reinstatement of the Directory for the efficiency it creates for both franchisees and lenders in applying for and granting SBA loans.

How do you ensure your brand can use the SBA Directory?

If your brand was on the Directory prior to its elimination:  Franchisors do not need to go through eligibility review again, provided they sign and submit the new Franchisor Certification to franchise@sba.gov by July 31, 2025. Critically, if the Franchisor Certification is not timely submitted, the franchised brand will be removed from the Directory and will need to go through the process below should it wish to be included at a later date.

If your brand was not on the Directory prior to its elimination: Franchisors must submit their franchise disclosure document, franchise agreement, and all other documents they require franchisees to sign to the SBA at franchise@sba.gov for eligibility review. Notably, franchised brands that the SBA may have previously determined were “ineligible” to be included on the Directory because the franchisor had too much “control” over the operation of franchisee’s business may now be eligible due to changes made by SOP 50 10 8. Specifically, the SOP removed the principle of control for establishing affiliation between entities; rather, affiliation now is determined by ownership (with consideration given to stock options, convertible securities, and the like).

What happens once you receive a Franchisor Certification?

If the SBA determines the brand is eligible, the franchisor will receive a Franchisor Certification to sign and submit, following which the brand will be added to the Directory. The Franchisor Certification replaces the SBA Addendum that parties previously needed to sign in connection with SBA loans. The Franchisor Certification requires franchisors to certify that any agreements between the franchisor and any franchisee obtaining an SBA loan will comply with the SBA eligibility requirements. In some cases, that makes certain provisions of the franchise agreement unenforceable against a franchisee with an SBA loan. The new system also places more responsibility on lenders, who must verify the brand is listed on the Directory.

While the new SBA rules remove the administrative burden of having to obtain an SBA Addendum for each franchisee obtaining an SBA loan, franchisors will now have to maintain a record keeping process to track franchisees with SBA loans. Otherwise, franchisors will not be able to identify franchisees with rights under the Franchisor Certification that may supersede terms of the franchise agreement, and may run afoul of SBA loan requirements.