{"ok":true,"canonical_url":"https://dealroom.so/glossary/fair-market-lease","api_url":"https://dealroom.so/api/public/glossary/fair-market-lease","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"fair-market-lease","term":"Fair Market Lease","group":"Reading the business","definition":"This is a lease agreement where the rent and terms are consistent with what similar properties would command in the current market. It reflects a true arm's length transaction.","what_it_means":"The SBA requires that any lease agreement related to the business, especially if it's with an affiliate of the seller or buyer, be at fair market value. Lenders will scrutinize leases to ensure the rent isn't artificially inflated or deflated, which could impact the business's cash flow for debt service.","url":"https://dealroom.so/glossary/fair-market-lease","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lease-agreement","term":"Lease agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"arm-s-length","term":"Arm's length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"owner-occupied-commercial-real-estate","term":"Owner-occupied commercial real estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}],"related_questions":[{"question":"How does a lender determine the fair market value of business equipment used as collateral?","url":"https://dealroom.so/sba-7a/questions/how-does-a-lender-determine-the-fair-market-value-of-business-equipment-used-as-collateral"},{"question":"How does the SBA verify the fair market value of assets contributed as equity injection?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-fair-market-value-of-assets-contributed-as-equity-injection"},{"question":"If a borrower contributes equipment as equity, how does the lender verify its fair market value?","url":"https://dealroom.so/for-lenders/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v"},{"question":"How does the SBA evaluate the fair market value of goodwill in a business acquisition for financing?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-evaluate-the-fair-market-value-of-goodwill-in-a-business-acquisition-for-"},{"question":"Can the fair market value of raw materials I contribute to the acquired business count towards equity?","url":"https://dealroom.so/sba-7a/questions/can-the-fair-market-value-of-raw-materials-i-contribute-to-the-acquired-business-count-tow"},{"question":"Can the fair market value of equipment I already own be used as equity for an acquisition?","url":"https://dealroom.so/sba-7a/questions/can-the-fair-market-value-of-equipment-i-already-own-be-used-as-equity-for-an-acquisition"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Fair Market Lease","url":"https://dealroom.so/glossary/fair-market-lease","source_type":"DealRoom Data"}}