SBA Loans for Franchises
With the SBA’s updated SOP 50 10 8 now in effect, it’s time for franchisors to reassess their financial screening standards. As of June 1, 2025, brands must be listed in the reinstated Franchise Directory, equity injection requirements are back, and traditional underwriting is once again the standard. The SBA’s minimum 10 percent equity contribution is now mandatory for all new acquisitions and startups.
Here’s the issue: too many brands are signing deals with underqualified candidates, and it’s showing up as a bloated SNO pipeline instead of real, open locations.
SNOs Don’t Build Brands
Signing franchise agreements isn’t growth. If you’re sitting on more Sold But Not Open (SNO) units than openings, that’s a signal to lenders, buyers, and prospects that your financial standards are too low.
Your Item 20 tells the story. It shows how many units you signed and how many opened over the past three years. The smart lenders we know keep historical FDDs to spot trends. They compare what you promise with what actually happens.
If your strategy chases quantity over quality, they will see it and adjust their risk appetite accordingly. You won’t get an SBA Loan for Franchises with too many SNOs.
SBA Loans for Franchises in Brick and Mortar
For leased or ground-leased brick-and-mortar models, especially in foodservice, lenders often expect 15 to 20 percent equity and sometimes much more. They also want to see that the borrower has reliable cash flow from existing operations and a cash reserve cushion to handle the volatility of early-stage ramp-up. Without real estate as collateral, lenders lean heavily on liquidity and financial discipline.
If your candidate doesn’t meet those standards, the loan won’t fund and the deal won’t open.
1. Capital Strength Drives Development
At Franchise Info, we work with brands to raise financial thresholds and target the right candidates—people who can get funded and execute. That means setting liquidity and net worth benchmarks based on real startup costs and lender expectations, not wishful thinking.
Here’s how we help you solve this problem and get you the SBA Loans for Franchises
- Define candidate qualifications that lenders will approve
- Reduce fallout from financing denials
- Turn more signings into openings
Growth does not come from awarding deals. It comes from opening doors.
2. What to Do Next – To Get SBA Loans for Franchises.
- Reassess what it actually costs to get a unit open and stable
- Get your Item 7 Estimated Initial Investment numbers up-to-date to reflect real-world costs franchisees face
- Set screening standards based on what lenders require today
- Stop approving candidates who can’t raise the capital
Also, look closely at your sales process. Whether you’re using an internal team or a third-party Franchise Sales Organization (FSO), there is often too much emphasis on commission-heavy multi-unit deals. Without internal checks and balances, those deals can get pushed through without enough scrutiny.
That is why your franchise approval process needs to filter for the 3 Cs: Capital, Capability, and Character.
At Franchise Info, we work with brands to formalize and enforce these standards. It protects your development pipeline and your reputatio
3. Ready to Build a Fundable Pipeline?
If your deals are stalling, SNOs are piling up, or lenders are passing on your candidates, you likely have a financial qualification issue. We help franchise systems attract and support qualified operators who open, operate, and scale. You get SBA loans for franchises.
The goal is not to sign more deals. It is to open more locations.
4. Let’s Make Your Franchise Brand More Bankable
If you’re ready to reduce your SNO count, raise your financial standards, and start awarding to candidates who can actually get funded, let’s connect. You need to know how to get SBA loans for franchises.
📩 Message me here on LinkedIn or email me at joe@franchisorsales.org to start the conversation.
I work alongside Ned Lyerly and Michael (Mike) Webster PhD, as part of the team at Franchise-Info Advisory Partners. Together, we’re experienced franchise executives who have scaled respected brands and know what it takes to grow the right way with sustainable operators, fundable pipelines, and strong internal systems.
