How to choose the best franchise to be eligible for the SBA loan?
The first thing to think about is type of business. When they say “TYPE of BUSINESS” they mean a lot of different factors.
On the one hand they say that almost every small business company can apply for the SBA loan. On the other they carefully evaluate the company’s current and prospective activity. The general evaluation criteria include:
-to be the US resident;
-to get financial resources from other sources too, including personal savings;
-to operate for profit (the SBA does not work with charitable, religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and marketing cooperatives, and churches and organizations promoting religious objectives)
What about franchises? They are eligible but only if franchisee makes financial decisions independently (the situation when franchisor deals with accounting and financial management is the first sign that franchisee will not get financing or guaranty from the SBA).
Speaking about business sphere I need to say that they can be divided into 3 groups:
I. Completely eligible (those not included into groups II and III)
II. Eligible with some limitations or restrictions
1. Businesses in agricultural sphere and farms. They can get financing and guaranty from the SBA but government wants them to turn to the Farm Service Agency (FSA) and check their financing and supporting programs first. It’s rather logical, I think…
2. Business in fishing sphere. It’s the same situation as in agricultural sphere. Government wants them to contact their specialized organization first - the National Marine Fisheries Service (NMFS), a part of the Department of Commerce.
3. Businesses in medical sphere (hospitals, clinics, emergency outpatient facilities, and medical and dental laboratories, convalescent and nursing homes). They are eligible if they have a proper medical license from the appropriate government agency.
III. Not eligible business.
There are some business spheres that are not supported by government programs in general and by the SBA program in particular. But I need to say that in my mind they are not associated with franchise business (maybe except some spheres in gambling…). They are:
1. Any form of illegal business (no comments)
2. Real estate investment. As I understand it doesn’t mean that government dislike that form of business or consider it something worthless. It’s rather reasonable as investment business consider real estate as a something short-term, as the object of business, but not capital or factor of production. And it conflicts with the main idea of small-business loan programs of the SBA – to help buying long-term assets to be used in production of goods or providing services.
3. The same relations exist toward other speculating activities (firms getting profits from fluctuations in price rather than through the normal course of trade). Also I can state that such types of business is too risky for the government as I think…
4. The companies that do not produce goods or provide services (companies dealing with money – financial institutions, banks, insurance companies on the one hand and gambling companies like casinos on the other). I think that they can easily survive without government support 
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What else do you need to consider in order to become eligible for the SBA programs except types of business? You need to present for what purposes you are going to use that money. Read my next article to learn what purposes are OK and what are not…