{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-if-i-plan-to-develop-raw-land-purchased-with-an-sba-loan","api_url":"https://dealroom.so/api/public/questions/what-are-the-requirements-if-i-plan-to-develop-raw-land-purchased-with-an-sba-loan","question":"What are the requirements if I plan to develop raw land purchased with an SBA loan?","topic":"Real estate","audience":"borrower","bot_mode":"buyer","short_answer":"An SBA 7(a) loan can finance the purchase of raw land for immediate business use and development, but not for speculative purposes or future development. The loan must include funds for construction and the business must occupy at least 51% of the property.","rule":"The SBA allows financing for real estate that will be occupied and used by the small business. If raw land is purchased, it must be part of a project that includes construction or renovation for the borrower's business operations, not just holding the land for future, uncertain use. A construction plan and budget are required.","example":"If you purchase a $200,000 plot of raw land to build a $500,000 manufacturing facility for your acquired business, the SBA loan could cover both the land and construction, provided you have detailed plans and permit approvals, and your business will occupy at least 51% of the facility.","what_lenders_check":"Lenders will require detailed construction plans, permits, and a robust budget. They are wary of speculative real estate purchases and need to ensure the project is viable and the business will occupy the property promptly upon completion to meet SBA eligibility.","required_facts":["Raw land purchase","Immediate business use","Not speculative","Construction plan","Owner-occupied 51%"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"Can I include the purchase of commercial real estate, where the business operates, within the same SBA 7(a) loan for a $2 million deal?","url":"https://dealroom.so/sba-7a/questions/can-i-include-the-purchase-of-commercial-real-estate-where-the-business-operates-within-th"},{"question":"What type of property appraisal is required if my $1.2 million SBA loan includes commercial real estate?","url":"https://dealroom.so/sba-7a/questions/what-type-of-property-appraisal-is-required-if-my-1-2-million-sba-loan-includes-commercial"},{"question":"Can I use an SBA 7(a) loan to purchase the real estate where the business operates?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-purchase-the-real-estate-where-the-business-operates"},{"question":"What happens if the business I am acquiring is located in a leased property?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-the-business-i-am-acquiring-is-located-in-a-leased-property"},{"question":"What kind of environmental due diligence is required if the business real estate is included in the loan?","url":"https://dealroom.so/sba-7a/questions/what-kind-of-environmental-due-diligence-is-required-if-the-business-real-estate-is-includ"},{"question":"Can an SBA 7(a) loan be used to buy a business that has environmental issues?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-buy-a-business-that-has-environmental-issues"}],"related_terms":[{"term":"Raw Land","url":"https://dealroom.so/glossary/raw-land"},{"term":"Lease with an option to purchase","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase"},{"term":"SBA Loan Program Requirements","url":"https://dealroom.so/glossary/sba-loan-program-requirements"},{"term":"SBA Program Requirements","url":"https://dealroom.so/glossary/sba-program-requirements"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Loan-to-Value","url":"https://dealroom.so/glossary/loan-to-value"}],"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/what-are-the-requirements-if-i-plan-to-develop-raw-land-purchased-with-an-sba-loan","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."]}