On Lending – SBA vs. Franchise Registry

For a majority of entrepreneurs, looking to own a business of their own through franchising, financing can be an extremely important factor. While there are a multitude of ways and means by which franchisee candidates can secure funds, there are a couple of standards that determine access to lending. For a business concept to establish legitimacy and be eligible for a loan, it must appear on the Franchise Registry, a database maintained by one of our most valuable corporate partners, FRANdata. And because many people do turn to the U.S. Small Business Association (SBA) for their funding requests, the SBA has its own directory to help lenders know if a brand can obtain their financing.

Our latest blog covers the difference between the Franchise Registry and the SBA Directory, brought to you by FRANdata, which specializes in providing a knowledge base for franchise brands, and applying market and industry data to help develop macroeconomic perspectives for franchisors and franchisees alike.

The Franchise Registry

Developed and maintained by FRANdata, The Franchise Registry is relied upon by its more than 9,000 lenders to be the source for vital documentation, verification and performance data and scoring needed to fulfill thousands of franchise loans every year. The Franchise Registry  provides lenders with education, clarity, and a centralized place for them to  find reliable information and documentation on a brand they are underwriting or seeking to build relationships with.

Lenders rely on the franchise registry to access a brand’s fund score – a franchise credit score that uses 13 key performance metrics that measure creditworthiness. The franchise registry’s verified franchisor members are brands who have a commitment to easing the way for their franchisees to receive financing. Verified franchisor members meet lender demands for efficient access to the information lenders need when they need it – giving their franchisees the best loan outcomes possible.

SBA Directory

The purpose of the SBA Directory is singular—to help lenders evaluate whether a franchise brand is eligible for financing through their organization. This means it’s possible that a franchise could appear on the Franchise Registry, but not necessarily the SBA Directory. Franchisors are welcome to apply to become SBA-affiliated. If accepted, they’ll appear on their searchable online directory page.

Most lenders who back loans for the franchise industry are put together by a portfolio team. It’s their job to assess the potential borrower’s needs and develop a financing package that will be analyzed and verified before it reaches the approval/denial stage. The portfolio team will document the process and use it in the future for other loan opportunities associated with specific franchising systems. 

FranNet understands that financing is often top-of-mind for our clients. Once you’ve decided to investigate a particular franchise brand, we can help you assess their creditworthiness. Aside from securing an SBA loan, we can also recommend additional funding sources from several franchise financing partners. Get started today with a no-cost, no-obligation appointment with a qualified FranNet representative who both lives and works in your area. Together, we can find a franchise ownership opportunity that matches up perfectly with your lifestyle and income-oriented goals.  

Aug 24, 2021