{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-leases-its-property-from-an-entity-owned-by-the-seller","api_url":"https://dealroom.so/api/public/questions/what-if-the-business-i-m-acquiring-leases-its-property-from-an-entity-owned-by-the-seller","question":"What if the business I'm acquiring leases its property from an entity owned by the seller?","topic":"Real estate","audience":"borrower","bot_mode":"buyer","short_answer":"This is permissible, but the SBA lender will require a new, arm's-length lease agreement with fair market terms for the acquiring business.","rule":"The SBA permits a seller-owned entity to continue leasing property to the acquired business. However, the lease must be on commercially reasonable, arm's-length terms, meaning the rent and conditions must reflect market rates, not preferential terms due to prior ownership. An appraisal of the real estate may be required to verify market rent.","example":"A buyer acquires a business that leases its space from the seller's separate real estate LLC. The lender will require a new lease agreement between the buyer's new business entity and the seller's LLC, ensuring the rent ($5,000/month) is at fair market value.","what_lenders_check":"Lenders ensure that related-party leases do not provide unfair advantages or disadvantages to the borrower or create conflicts of interest that could jeopardize the business's stability or its ability to service the SBA loan.","required_facts":[],"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 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":"Acquiring entity","url":"https://dealroom.so/glossary/acquiring-entity"},{"term":"Business Entity","url":"https://dealroom.so/glossary/business-entity"},{"term":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"Veteran-owned business","url":"https://dealroom.so/glossary/veteran-owned-business"},{"term":"Business Entity Structure","url":"https://dealroom.so/glossary/business-entity-structure"},{"term":"New Business Entity","url":"https://dealroom.so/glossary/new-business-entity"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-leases-its-property-from-an-entity-owned-by-the-seller","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."]}