SBA Changes and The Franchise Registry

December 9th, 2016 by Meme Moy

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We’franchise registryve been keeping you up to date regarding the pending changes at the SBA related to its lending processes for franchise businesses. This week, the SBA formally announced its new Standard Operating Procedure and provided access to the new standard addendum.

The new SOP 50 10 5 (i), which will be effective January 1, 2017 describes changes to SBA procedures specifically for franchises.  The SBA will no longer review franchise agreements, instead requiring franchisors and franchisees to sign its non-negotiable, standard addendum for government-guaranteed lending. This clearly will cause significant confusion with franchisors, franchisees and lenders.

The Franchise Registry remains the centralized place where lenders can find out information about the franchise systems whose franchisees they finance and want to finance. The SBA changes mean:

  • That lenders will need to know whether a franchisor will be willing to sign the new SBA addendum. As part of your existing Franchise Registry membership, you will be able to indicate your willingness to comply and if so, on what terms. Otherwise, call us to discuss your issues with the addendum.
  • For 2017, renew your membership when your FDD is released.  In the meantime, if you have not scheduled your financing consultation call, we encourage you to do so before you create your 2017 FDD. Click here to schedule a call

Currently, more than 8,000 small business lenders across the country use the Franchise Registry to find business development and credit risk information about franchise brands and connect with over 2,500 franchise clients to make better and faster loan decisions.

In the New Year, FRANdata will continue to expand services that help improve access to franchise financing, whether SBA or conventional lending.  With change comes uncertainty but at FRANdata we are committed to helping you navigate these changes while keeping capital flowing to franchisees.

Access the SBA Addendum here

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