The Small Business Association (SBA) recently announced key changes to its standard operating procedure for 2025, including:
- Reinstatement of the SBA Franchise Directory
- Updated fees and collateral requirements for loans
- Mandatory borrower citizenship verification
With new rules in place, some in the industry are uncertain about how to navigate the SBA franchise rule changes as we move forward in 2025. BoeFly is committed to helping both franchisors and franchisees adjust confidently. We recently hosted a webinar with industry experts to explore this topic. Keep reading for an overview of SBA financing changes for franchisees and SBA lender changes in 2025. Want to watch the webinar? You can do that here.
Why is the reinstatement of the SBA Franchise Directory important?
The SBA Franchise Directory was started in January 2018 and discontinued in 2023. It’s a resource that lenders use to verify the eligibility of franchise brands for SBA loans. In short, if a brand is listed in the directory, it’s eligible for SBA financing. The directory is important because it takes the work of identifying eligibility off the lender’s plate and puts it onto the SBA’s. This makes it easier for lenders, which should mean more efficient capital flows for franchisees. As of June 1, 2025, the directory has been reinstated and will once again become the primary tool lenders use to determine SBA loan eligibility.
Brands that were on the list in 2023 are still on the list today — the franchisor will just need to sign and submit an updated certification form by July 31, 2025. For brands that were not in the directory in 2023, BoeFly can help you get certified and listed quickly. There’s no charge, and the process is simple.
What are the updated fees and collateral requirements for loans?
Borrowers with loans approved on or after March 27, 2025, are now subject to up-front guarantee fees and lender service fees. The fee is 3% to 3.5% on loans over $150,000. But don’t let these fees send you into a panic. The good news is that they only apply to the guaranteed portion of the loan (usually 75%), not the full amount. And even with the additional fees, an SBA loan can still be a better choice than a private lender, who may charge fees of up to 5% or more depending on your credit score and the franchise’s track record.
The SBA also issued new rules for lenders that went into effect on June 1, 2025. One of the biggest changes was reducing the small loan program threshold from $500,000 down to $350,000. Lenders are now required to consider outside collateral (such as your home or your cash on hand) for loans over $350,000. Again, don’t worry — even if you don’t have collateral, you may still be able to secure financing.
What are the mandatory citizenship requirements for borrowers?
Another change to the franchise SBA loan process is that the business must now be 100% owned by a U.S. citizen or lawful permanent resident. Previously, only 51% of the entity had to be owned by a U.S. citizen.
We recommend franchisors include citizenship status in their diligence process. The people listed on your franchise agreement must be U.S. citizens or permanent residents to qualify for an SBA loan.
Will all the SBA franchise rule changes in 2025 impact loan processing times?
Although policy and process changes could impact the time it takes for borrowers to secure financing, being prepared will help keep loans moving. Start the funding process early. BoeFly offers a simple, one-step application that will match you to the best lender for your funding needs. We have access to both SBA-preferred and conventional lenders who know your franchise brand, speeding up the approval process. Our experts will be with you every step of the way.
Franchisors can save time by using BoeFly’s bVerify tool to vet their franchisee candidates. This process includes asset verification and credit and background checks, so you can move forward confidently.
BoeFly is here to help
With more than a decade of industry experience, BoeFly has experience navigating the ups and downs of industry changes. Beyond addressing SBA rule changes, BoeFly is also trusted by strategic-minded franchisors to establish dedicated loan programs. For example, we recently launched a program to deliver start-up financing for up to three units simultaneously with a leading SBA lender. Such programs meaningfully accelerate openings. Whether you’re a franchisor that needs to get SBA certification help or you seek a dedicated loan program, or a franchisee needing to secure funding, we’re here for you. Click on the link that best describes you below to get started now.
