Effective June 1, 2025, the U.S. Small Business Administration (SBA) will reinstate its Franchise Directory, a critical development for franchise systems and franchisees seeking SBA financing. Originally launched in 2018 and discontinued in 2023, the directory simplifies the SBA loan approval process by providing lenders with a centralized, verified resource to determine franchise eligibility—significantly reducing paperwork and delays.
This move has been strongly supported by the International Franchise Association (IFA), which highlighted the adverse impact of the directory's elimination on franchise development and lending. According to FRANdata, approximately 20% of SBA loans go to franchises, underscoring the significance of this tool in facilitating capital access.
Key updates to the reinstated Directory include:
- No SBA Addendum required: The SBA Addendum (Form 2462 or negotiated addendum) is not required. Franchisors will need to certify in writing they meet the conditions required to be listed on the directory. Many of these conditions are the same as those of the previous directory. Franchisors that were previously listed in the directory may sign the certification within a specified period and gain reinstatement.
- Simplified application: Franchisors not previously listed must submit their FDD, franchise agreement, and related documents to the SBA for review atfranchise@sba.gov.
- Expanded eligibility: Brands that do not strictly meet the FTC's definition of a franchise may still be listed if otherwise eligible.
- No cost to be listed: Inclusion remains free for franchisors.
Once approved, brands receive an SBA Franchise Identifier Code and are added to the directory—an essential step for ensuring franchisee access to SBA-backed loans.
This is a positive and strategic step for franchise growth and lending efficiency. Clients with questions about qualifying for or being listed on the directory are encouraged to contact us for guidance.
The International Franchise Association summarized the benefits of the Franchise Directory with additional information found here.
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