The U.S. Small Business Administration (SBA) is amending various regulations governing SBA's 7(a) Loan Program and 504 Loan Program. As part of the amended revisions, the SBA is removing the provisions relating to affiliation based on franchise and license agreements. Because of that removal, the SBA is eliminating the SBA Franchise Registry as of May 11, 2023.
Nevertheless, as requirement for all loans, SBA lenders must still examine the franchised business for affiliation based on ownership. The SBA announcement described the following as an example: "(W)hen lending to a Franchised business, the SBA Lender must determine who owns the applicant business and any businesses the applicant owns in accordance with these regulations. However, neither the SBA Lender nor SBA will review the applicant Franchised business for affiliation with other entities beyond ownership; the applicant business will not be considered affiliated with the Franchisor or other Franchised businesses except by ownership."
Originally published 12 April 2023.
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