For SBA lenders
Short answer
No, businesses whose primary purpose is to own and lease real estate, and where the income is primarily passive, are generally ineligible for SBA 7(a) loans.
The SBA aims to support operating businesses. Real estate investment properties or businesses engaged in passive real estate holdings are considered ineligible because they do not contribute directly to job creation or active economic development in the same way as an operating business. There are limited exceptions for owner-occupied real estate where the operating business uses at least 51% of the property.
A borrower wants a 7(a) loan to purchase a commercial building with multiple tenants, where the borrower's business will only occupy 20% of the space, and the remaining 80% is leased to other businesses. This would be deemed an ineligible passive real estate activity.
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.
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