SBA To Reinstate Franchise Directory

The Small Business Administration (SBA) announced that it will reinstate the Franchise Directory, a tool essential for lenders who are assessing SBA loan eligibility. This action follows the elimination of the Franchise Directory in 2023.

"We applaud the SBA's efforts to increase efficiency in the financing process for franchisees by restoring the Franchise Directory," said Michael Layman, IFA chief advocacy officer. "As a centralized and verified location for lenders to check a franchise's eligibility for SBA financing, the Franchise Directory was a key tool for lenders to efficiently process franchisee loan applications. Its elimination disrupted the development of franchised businesses, causing lenders to pull back from franchise lending, denying would-be entrepreneurs access to critical sources of start-up capital. IFA is proud of our work with the SBA team to reinstate this valuable resource to provide more franchisees the opportunity for small business ownership."

According to FRANdata, an estimated 20% of all SBA loans go to franchises. Following its elimination in 2023, IFA called for a reinstatement of the Franchise Directory in its 2025 Roadmap for Economic Growth. In a February op-ed in the Atlanta Journal-Constitution, IFA President and CEO Matt Haller called its resurrection "a sensible and bipartisan" step.

The SBA directory has also served as a tool for prospective franchisees as they evaluate franchise opportunities.

In reinstating the Franchise Directory, the SBA identified opportunities to optimize the process for determining if a franchise meets the criteria for listing. Key improvements advocated for by IFA and reflected in the updated version of the Franchise Directory include:

• Replacing the SBA Addendum (Form 2462 or negotiated addendum) with a certification signed by the franchisor acknowledging the conditions required to be listed on the directory, including many conditions franchisors will recognize from the prior Franchise Directory.
• Franchisors previously included in the directory may sign the certification within a specified period to remain on the directory.
• Franchisors not previously included in the directory must submit an application to the SBA demonstrating that they meet the eligibility criteria for listing.
• Listing on the Franchise Directory will remain at no cost to franchisors. A franchisor must be listed in the directory for its franchisees to access SBA funding.

Toya Evans, co-owner of Healthy Living Ventures, says the move will help franchisees access the money they need. Her company operates six Tropical Smoothie Cafe units, three Hand & Stone Massage and Facial Spa units, and one Vio Med Spa location.

"Franchising is such an important component to our economy, and yet access to capital is one of the biggest hurdles we face," Evans said. "I am happy to see the directory reinstated to continue to provide funding for both start-up and expansion within franchising."

Robin Gagnon, co-founder and CEO of We Sell Restaurants, also applauded the SBA's decision.

"We commend the SBA for reinstating the Franchise Directory," she said. "This is a meaningful step toward restoring clarity in the lending process for franchise buyers. At We Sell Restaurants, we've seen firsthand how this functions to streamline access to capital and empower more individuals to pursue franchise ownership. It's a win for the industry and the future of small business."

Austin Alexander, vice president of franchise development at Heights Wellness Retreat, says the return of the directory will help spur growth.

"As a franchise development leader, I see the return of the SBA Franchise Directory as a powerful catalyst for aspiring franchisees and entrepreneurs," Alexander said. "By reducing paperwork and streamlining the approval process, it enables quicker access to funding, accelerating the path to business ownership and fueling franchise growth across the country."