Revisions to Franchise Review Process – SOP 50 10 5(J)

The U.S. Small Business Administration (SBA) has issued Standard Operating Procedure (SOP) 50 10 5(J), which will be effective January 1, 2018. Among other changes, SBA has revised the review process for applicants for 7(a) and 504 loans that are or will be operating under a franchise, license, dealer, jobber, or similar agreement that meets the Federal Trade Commission (FTC) definition of a franchise.1 These changes are found in Subpart B, Chapter 2, Paragraph II.D.8 for 7(a) loans and Subpart C, Chapter 2, Paragraph II.D.8 for 504 loans.

This Notice describes the key changes made to the franchise review process in SOP 50 10 5(J) to improve consistency and certainty for Lenders, Certified Development Companies (CDCs), franchisors, franchisees, and SBA personnel. Under these changes, Lenders and CDCs will no longer have to review franchise or other brand documentation for affiliation or eligibility.

For loans processed through December 31, 2017, SBA Lenders must continue to follow the franchise review procedures set forth in SOP 50 10 5(I) and SBA Policy Notice 5000-1941 (effective 2-14-2017), and should contact franchise@sba.gov to obtain an SBA Franchise Identifier Code, if necessary.

Please download the PDF for full details.