The Small Business Administration (SBA) is finalizing major policy updates that will have a direct impact on franchise financing. These changes — taking effect with the release of the new Standard Operating Procedures (SOP) on June 1st — will reshape the eligibility process, how brands are listed, and what franchisors must provide to maintain SBA financing access for their franchisees.
As your trusted franchise financing experts, FRANdata is working closely with the SBA and lenders to ensure you have a clear path forward. Here’s what you need to know:
Key Changes Franchisors Must Prepare For:
1. Certification Requirement with FDD Submission
Franchisors will now be required to sign a new SBA Certification at the time they submit their FDD for SBA eligibility. This tighter review process links your franchise disclosure to your SBA eligibility directly.
Important:
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For existing brands already on the SBA Franchise Directory, a signed certification must be submitted by July 31, 2025.
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If a franchisor does not sign the certification by July 31st, the brand will be removed from the SBA Franchise Directory and will not be eligible for SBA-backed financing.
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There will be two certifications: one for franchisors and one for distributors (if applicable to your system).
2. Mass Review and Certification Rush Coming
Roughly 8,000 franchisors must submit signed certifications by the July 31st deadline — creating what SBA anticipates will be a mad rush.
At the same time, there will be a surge in new franchise systems seeking review and certification under the updated process. Acting early will be critical.
3. Temporary Procedures Until July 31st
Until July 31st, franchisors already listed on the SBA Franchise Directory will operate under temporary procedures:
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Lenders will continue to rely on the existing addendum used under the old SBA Franchise Directory.
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Brands will be listed with a note that the updated certification is pending.
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After July 31st, only fully certified brands will remain eligible.
4. Eligibility Standards Are Tightening
The SBA is restoring older SOP rules related to eligibility:
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Passive business models (e.g., salon suites, flexible office spaces) must show ownership control and active operational management.
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Franchisees must certify they serve both men and women — lenders will again be responsible for verifying and documenting this.
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Management agreements will face greater scrutiny (e.g., franchisor-employed managers could trigger eligibility issues if not properly structured).
If the SBA determines your model is ineligible, even after certification, your brand will not be listed.
5. SBA Franchise Directory Is Officially Coming Back
The SBA Franchise Directory will once again be the primary tool lenders use to determine franchise eligibility. SBA has indicated a strong commitment to maintaining and updating it under these new, more rigorous standards.
Your Membership At Work: How FRANdata Can Help
Navigating these sweeping SBA changes can be complex — but you don’t have to do it alone.
FRANdata works directly with SBA officials and lenders to guide franchisors through:
- Only for Franchise Registry members, FRANdata is working with SBA to submit applications en masse. We will provide updates as more information become available
- Pre-submission vetting of your FDD and business model
- Certification form preparation
- Risk mitigation strategies if eligibility concerns arise
Updated: SBA Changes – Quick FAQ for Franchisors
Q: I’m already listed on the SBA Franchise Directory. Do I still have to act?
A: Yes. You must sign and submit the new SBA Certification by July 31, 2025. Failure to do so will result in removal from the SBA Franchise Directory.
Q: What happens if I miss the July 31st deadline?
A: Your brand will no longer be eligible for SBA-backed loans through lenders.
Q: What about the SBA Franchise Directory?
A: The SBA Franchise Directory is coming back and will be the main reference point for lenders. Only certified brands will be listed after July 31st.
Q: Why the rush?
A: About 8,000 brands will be required to sign certifications at once, alongside a large volume of new franchise brands applying for certification.
Q: Will there be different certifications?
A: Yes — there will be two forms: one for Franchisors and one for Distributors if your brand has a distributor model.
Q: How does FRANdata help with this?
A: We guide you through the certification, keep you updated with the latest SBA changes, help you understand your credit-worthiness from the perspective of lenders.