{"ok":true,"canonical_url":"https://dealroom.so/glossary/passive-real-estate","api_url":"https://dealroom.so/api/public/glossary/passive-real-estate","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":"passive-real-estate","term":"Passive real estate","group":"Your money in the deal","definition":"Real estate held primarily for investment purposes rather than for active business operations. The SBA generally prohibits funding businesses that are primarily passive.","what_it_means":"The SBA wants to fund operating businesses, not landlords. If the business you're buying generates more than 50% of its revenue from renting out real estate, it's likely considered passive and ineligible for a 7(a) loan. Be sure the business you're acquiring is actively operating.","url":"https://dealroom.so/glossary/passive-real-estate","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":"owner-occupied-commercial-real-estate","term":"Owner-occupied commercial real estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"lease-agreement","term":"Lease agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"naics-code","term":"NAICS code","url":"https://dealroom.so/glossary/naics-code"}],"related_questions":[{"question":"Can an SBA 7(a) loan be used for speculative investments or passive real estate?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-for-speculative-investments-or-passive-real-estate"},{"question":"Can a business primarily generating passive income from non-owner-occupied commercial real estate rentals be 7(a) eligible?","url":"https://dealroom.so/for-lenders/questions/can-a-business-primarily-generating-passive-income-from-non-owner-occupied-commercial-real"},{"question":"When is a business primarily engaged in passive activities, such as real estate rentals, considered ineligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-is-a-business-primarily-engaged-in-passive-activities-such-as-real-estate-rentals-con"},{"question":"Can an SBA 7(a) loan be used to acquire a business that is primarily an investment or passive real estate holding company?","url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-be-used-to-acquire-a-business-that-is-primarily-an-investment-or-passi"},{"question":"What is the difference in repayment terms between real estate and non-real estate loans?","url":"https://dealroom.so/sba-loans/basics/what-is-the-difference-in-repayment-terms-between-real-estate-and-non-real-estate-loans"},{"question":"If the business owns real estate, must the buyer also purchase the real estate with the business?","url":"https://dealroom.so/sba-7a/questions/if-the-business-owns-real-estate-must-the-buyer-also-purchase-the-real-estate-with-the-bus"}]},"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 — Passive real estate","url":"https://dealroom.so/glossary/passive-real-estate","source_type":"DealRoom Data"}}