{"ok":true,"canonical_url":"https://dealroom.so/glossary/fair-market-rent","api_url":"https://dealroom.so/api/public/glossary/fair-market-rent","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-rent","term":"Fair market rent","aka":"Market rent","group":"Reading the business","definition":"This is the going rate for similar commercial properties in the area. When buying a business that leases from a seller-owned entity, ensure the rent isn't artificially low or high.","what_it_means":"If the seller's operating business leases from a related real estate entity, the rent must be at \"fair market\" rates. Artificially low rent inflates the business's profitability, while high rent might be a disguised distribution. Your lender will verify this to ensure the business's true cash flow can support the new debt.","url":"https://dealroom.so/glossary/fair-market-rent","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"}],"related":[{"slug":"lease-agreement","term":"Lease agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"real-estate-entity","term":"Real estate entity","url":"https://dealroom.so/glossary/real-estate-entity"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"}],"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 rent","url":"https://dealroom.so/glossary/fair-market-rent","source_type":"DealRoom Data"}}