If a Budget franchisee uses SBA financing, are there any restrictions on how the funds can be used?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither Budget nor its affiliates offers direct or indirect financing to Budget Franchise owners. Budget does not guarantee your note, lease, vendor purchases, or any other obligation.
We are listed on the SBA Franchise Directory located at: https://www.sba.gov/document/support- -sba-franchise-directory. If you obtain financing through the SBA, you must sign the SBA Addendum to Franchise Agreement, attached as Exhibit H-1.
Source: Item 10 — FINANCING (FDD page 37)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget does not offer direct or indirect financing to its franchisees. However, Budget is listed on the SBA Franchise Directory. If a franchisee obtains financing through the SBA, they are required to sign the SBA Addendum to the Franchise Agreement, which is attached as Exhibit H-1.
While the FDD states that Budget is listed on the SBA Franchise Directory and requires an addendum to be signed, it does not specify any restrictions on how SBA funds can be used. Typically, SBA loans have specific requirements regarding their use, often related to business operations, equipment, or real estate.
A prospective Budget franchisee should carefully review the SBA Addendum (Exhibit H-1) and consult with the franchisor and the SBA to fully understand any restrictions or requirements related to the use of SBA financing for their Budget franchise. Understanding these restrictions is crucial for financial planning and ensuring compliance with both Budget's and the SBA's requirements.