{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-buyer-contribute-a-pre-paid-lease-agreement-for-the-business-premises-as-part-of-the","api_url":"https://dealroom.so/api/public/questions/can-a-buyer-contribute-a-pre-paid-lease-agreement-for-the-business-premises-as-part-of-the","question":"Can a buyer contribute a pre-paid lease agreement for the business premises as part of their equity injection?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a pre-paid lease can be considered part of the equity injection if it represents a bona fide cash outlay by the buyer, is non-refundable, and reduces the business's operating costs.","rule":"Pre-paid expenses, such as rent, can qualify as equity if they are documented as an actual cash injection by the borrower into the business, directly benefit the business, and are non-refundable. The amount must be clearly itemized and verifiable.","example":"A buyer pre-pays 12 months of rent at $5,000/month for the acquired business's facility, totaling $60,000. This $60,000, if documented as an unrecoverable cash outlay, can count towards the equity injection.","what_lenders_check":"Lenders verify that the pre-payment is non-refundable and represents a true cash injection by the borrower, not just a rearrangement of existing business obligations. They require the lease agreement and proof of payment.","required_facts":["Pre-paid lease","Bona fide cash outlay","Non-refundable","Reduces operating costs","Verifiable documentation"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"Can I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-7a/questions/can-i-use-retirement-funds-from-a-401-k-as-equity-injection-for-a-750-000-business-purchas"},{"question":"Can funds from a home equity line of credit (HELOC) be used as my equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-heloc-be-used-as-my-equity-injection-for-a-bus"},{"question":"Is it possible to use a second mortgage on my personal residence as an equity injection for a $1.5 million business acquisition?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-to-use-a-second-mortgage-on-my-personal-residence-as-an-equity-injection-fo"},{"question":"How much cash must I personally inject for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-much-cash-must-i-personally-inject-for-an-sba-7-a-business-acquisition"},{"question":"What are the acceptable sources for my cash equity injection beyond personal savings?","url":"https://dealroom.so/sba-7a/questions/what-are-the-acceptable-sources-for-my-cash-equity-injection-beyond-personal-savings"},{"question":"What is the SBA's minimum required equity injection percentage for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"Pre-paid lease","url":"https://dealroom.so/glossary/pre-paid-lease"},{"term":"Pre-Paid Expenses","url":"https://dealroom.so/glossary/pre-paid-expenses"},{"term":"Lease agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"term":"Commercial lease agreement","url":"https://dealroom.so/glossary/commercial-lease-agreement"},{"term":"Buyer Equity","url":"https://dealroom.so/glossary/buyer-equity"},{"term":"Breach of the Loan Agreement","url":"https://dealroom.so/glossary/breach-of-the-loan-agreement"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-buyer-contribute-a-pre-paid-lease-agreement-for-the-business-premises-as-part-of-the","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}