The Small Business Administration (SBA) has reinstated key oversight measures for franchise lending amidst rising defaults. Starting August 1, 2025, franchises must be listed in the Franchise Directory to enable their franchisees to qualify for SBA-backed loans. The directory outlines which brands meet eligibility requirements, reversing a past policy that granted lenders more discretion. Franchisors will need to submit required documentation, and failing to be listed means franchisees cannot secure funding. Stricter oversight under the updated SOP aims to bolster loan security and minimize risk for both the SBA and franchisees.
The SBA's reinstatement of the Franchise Directory will significantly impact franchisors, as their presence on the list is crucial for enabling franchisees to secure SBA-backed loans.
Franchisors must act promptly to submit their documentation to the SBA Franchise Directory to ensure their compliance with the new eligibility standards for loans.
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