ASK THE EXPERTS: 504 Q&A

Q – How Does the 504 Loan Program Work for Franchises?

A – For franchise businesses, the franchise agreement must be submitted by the Certified Development Company (FFCFC) to the SBA for review and approval, prior to the funding of a 504 Loan. There may be a simplified pre-approval of the franchise agreement if the franchise appears in the Official Franchise Registry.

The Registry lists names of franchisors whose franchisees enjoy the benefits of a streamlined review process for SBA loan applications. If a “certificate of no-change” is submitted, loan applications for registered franchisors can be reviewed and processed very quickly. Through use of the Franchise Registry, small business franchisees get better service and quicker loans.

The Franchise Registry may be accessed at http://www.franchiseregistry.com

Q – What if the franchise is not on the registry?

A – The borrower must supply the franchise offering circular and franchise agreement to FFCFC for review by SBA district counsel to determine eligibility. After submission to the SBA, the process could take as long as two weeks for review. If the franchise comes back as ineligible, the Certified Development Company (FFCFC) will then make a determination as to whether or not there is a "fix" to help make the franchise eligible and will work with the borrower and the franchisor to supply the necessary documents to resubmit to the SBA for a further review. This may take an additional one to two weeks for processing. If there is not a "fix," then the franchise is deemed ineligible and the application cannot be processed any further.

If you have a question you’d like the FFCFC 504 Experts to answer email it to insider@ffcfc.com.