Since its inception back in 2018, the SBA Franchise Directory has served as one of the industry’s leading resources for franchise brands, in which they were reviewed, vetted, approved for SBA-backed loan programs and other forms of funding. In a way, the directory served as a de facto stamp of approval for franchise brands, as their franchisee candidates could get reassurance that banks and other lending institutions would consider funding for any franchisors appearing on the list.

But late last year, the Small Business Administration (SBA) hinted that the organization was considering a proposed rule change that would eliminate its franchise directory. This news was met by strong opposition from the International Franchise Association (IFA), representing the franchise industry, and the National Association of Government Guaranteed Lenders (NAGGL), representing banking institutions and other industry finance specialists. They argued that the system in place had been working well for some time in assessing brand-specific loan eligibility. Regardless of the outcry, the SBA followed through on their proposed rule change in an April 10 announcement, stating that their franchise directory would officially cease operations on May 11.


Understandably, the SBA’s announcement triggered an immediate ripple effect throughout the franchise industry. Franchisors made their concerns clear, noting that the absence of the directory could delegitimize their brands, as well as their reputational value in the eyes of franchisee candidates. Banks and lending institutions, all of whom relied upon free access to the SBA Franchise Directory, expressed concern that the broader due diligence and authentication conducted on behalf of thousands of brands would now become their primary responsibility. And that could have a drastic effect on the speed and timeliness of their loan approval processes.


But a closer look at the current situation more closely resembles the sentiment found in a common refrain: “…the more things change, the more they stay the same.”


The elimination of the SBA Franchise Directory may seem like a significant development for the industry, but in reality, the fundamental processes for securing franchise funding haven’t really changed at all. In the absence of the SBA Franchise Directory, the banks will still be responsible for the exact same due diligence as they’ve conducted in the past. With their own funds at stake, these lenders have a fiduciary duty to read, review, and vet the proposed franchise agreements on behalf of candidates looking to secure loans. This standard operating procedure remains the same, regardless of whether there is an official or unofficial directory of brands who’ve been authenticated and deemed eligible for funding.


Many of the major funding vendors and suppliers in the franchising industry are well-equipped and have decades of experience connecting qualified candidates with suitable brands and lending partners. And they’ve always relied upon the SBA’s own guidelines to navigate the process. They’ve seen SBA policy changes many times in the past, yet funding navigators have always managed to find new solutions designed to help thousands of entrepreneurs fund the businesses of their dreams.


While free and unfettered access to the SBA Franchise Directory has been a helpful resource over the past five years or so, it also wasn’t without its own limitations in some respects. In becoming the primary arbiter of eligible franchise funding, there were often delays in the approval process due to the sheer volume of new brands entering the marketplace. At times, the SBA’s appraisal process came with a waiting period that often stretched into several months. This delay in approval and inclusion is particularly costly for new and emerging brands who are champing at the bit to launch their own franchising programs. Until that seal of approval was given and the brand was officially added to the directory, banks and other lending institutions were extremely wary about funding any new deals.


In the many decades of service prior to the SBA directory, franchise funding specialists and lending institutions have traditionally relied upon an alternative source in FRANdata, a private sector company that’s established a reputation as one of the premier franchise research firms and official partner of the IFA. Their data and insights at the franchise brand level are every bit as reliable a resource in determining funding eligibility. Now, in the absence of the SBA Franchise Directory, it’s widely expected that the industry will once again return to utilizing FRANdata’s Franchise Registry.


If one thing has been constant in decades of service to the franchising industry, it’s that change is inevitable. But the funding specialists that help empower business owners and support the industry’s growth always manage to embrace these changes and move forward with even better solutions. Franchise funding experts have a single-minded mission and a passion for helping entrepreneurs. We specialize in bridging the financial gap, allowing prospective small business owners to live the lives they’ve dreamed about. Even in the wake of this new development, as far as the industry’s franchise funding specialists are concerned, it’s the same as it ever was.


Reg Byrd is the president of SBA & Bank Financing at Benetrends. A trusted leader in franchise and small business funding for over 40 years, Benetrends is responsible for creating the 401(k)/IRA rollover option, which has helped fund nearly 30,000 entrepreneurs over the last 40 years. Benetrends provides a comprehensive suite of small business funding options and business service solutions. For more information, please visit Benetrends and connect on Facebook, Twitter, YouTube, and LinkedIn. Reg Byrd can be reached at