{"ok":true,"canonical_url":"https://dealroom.so/glossary/related-party-lease","api_url":"https://dealroom.so/api/public/glossary/related-party-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":"related-party-lease","term":"Related-Party Lease","group":"Reading the business","definition":"A lease agreement where the business leases property from its owner or an affiliated entity. These leases require scrutiny because terms might not be \"arm's length,\" potentially inflating expenses or masking true profitability.","what_it_means":"During due diligence, carefully evaluate any related-party leases for commercial real estate or equipment. Lenders will want to ensure the lease terms are at fair market value. If the lease payments are excessive, the lender might \"normalize\" them to market rates when calculating cash flow, affecting the business valuation and your ability to qualify for the loan.","url":"https://dealroom.so/glossary/related-party-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":"arm-s-length","term":"Arm's length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-occupied-commercial-real-estate","term":"Owner-occupied commercial real estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","term":"Lease agreement","url":"https://dealroom.so/glossary/lease-agreement"}],"related_questions":[{"question":"When is an independent business valuation required for an SBA 7(a) acquisition, especially for related party transactions?","url":"https://dealroom.so/sba-7a/questions/when-is-an-independent-business-valuation-required-for-an-sba-7-a-acquisition-especially-f"},{"question":"If the business property is leased, can the SBA loan finance a security deposit for the lease?","url":"https://dealroom.so/sba-7a/questions/if-the-business-property-is-leased-can-the-sba-loan-finance-a-security-deposit-for-the-lea"},{"question":"If the business property is leased, can an SBA 7(a) loan finance security deposits for the lease?","url":"https://dealroom.so/sba-loans/basics/if-the-business-property-is-leased-can-an-sba-7-a-loan-finance-security-deposits-for-the-l"},{"question":"Can an SBA 7(a) loan finance tenant improvements on leased property if the lease term matches the loan term?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-tenant-improvements-on-leased-property-if-the-lease-term-match"},{"question":"If I am buying a business that leases its property, can I get a longer loan term if the lease is long-term?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-a-business-that-leases-its-property-can-i-get-a-longer-loan-term-if-the-lea"},{"question":"Why does the SBA combine the size of related businesses when checking loan eligibility?","url":"https://dealroom.so/sba-loans/basics/why-does-the-sba-combine-the-size-of-related-businesses-when-checking-loan-eligibility"}]},"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 — Related-Party Lease","url":"https://dealroom.so/glossary/related-party-lease","source_type":"DealRoom Data"}}