Tag Archives: Small Business Administration (SBA)

SBA-Backed Franchise Lending Today

The U.S. Small Business Association’s loan guaranty program has gone through a number of changes in recent years. The current rule became effective January 1, 2018, and supersedes changes described in my blog postings in December 2014 and 2016. A franchisor that wants its franchisees to be able to obtain SBA-backed loans to finance their franchised businesses must be listed on the SBA Franchise Directory. The directory, which is maintained on the SBA’s website, shows to franchisees and lending banks the franchise systems that qualify for SBA-backed lending. To be listed on the SBA Franchise Directory, a franchisor must submit to the SBA …


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The New SBA Addendum

Effective January 1, 2017, any franchisor that wants to offer SBA guaranteed financing for its franchisees will use a single, two-page form addendum.   In a notice issued just before Thanksgiving, the SBA announced that it will no longer review franchise agreements to determine whether affiliation exists between the franchisor and franchisee in any specific franchise system.  Previously negotiated SBA addenda will no longer be accepted. SBA loans are only available to independent small businesses as defined in the SBA regulations.  Some franchisors impose a level of control in the franchise agreements that the SBA considers to create “affiliation” between the franchisor and …


SBA Requests Comments on Franchise Loan Program

The U.S. Small Business Administration (SBA) is requesting comments from the public on all aspects of its franchise lending program.  The SBA issued its notice and request for comment December 8, 2014.  Comments must be submitted no later than February 6, 2015. The SBA guarantees bank loans to franchisees that apply and qualify under certain SBA lending programs.  The SBA guarantee makes it possible for franchisees that otherwise would not qualify for a loan to finance their franchise businesses.  But not all franchise agreements fall within the scope of the SBA requirements.  Some franchise systems have provisions in their franchise …