For SBA lenders
Short answer
No, typically businesses primarily engaged in owning and leasing real estate are ineligible for 7(a) loans, unless the real estate is substantially owner-occupied for their active business operations.
The SBA defines businesses primarily engaged in passive activities, such as real estate rentals, as ineligible. An exception exists if the borrowing entity occupies at least 51% of the property (for existing buildings) or 60% (for new construction) for its active eligible business operations, demonstrating it's not primarily a landlord.
A business owns a commercial building and rents out 80% of its space to other businesses, while using only 20% for its own operations. This business would be ineligible. If it used 60% of the space, it would likely be eligible.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on eligibility determinations
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