For SBA lenders
Short answer
Lenders must ensure the lease term, including options, is sufficient to cover the loan term, and obtain landlord's consent for the leasehold improvements and lien on fixtures.
When a 7(a) loan finances substantial leasehold improvements, the lender must verify that the lease agreement, including any renewal options, has a term at least equal to the loan's maturity. Furthermore, the lender must obtain a landlord's waiver and consent, allowing the lender to perfect a lien on the leasehold improvements and fixtures, and to enter the premises to salvage collateral if needed.
A $200,000 7(a) loan includes $150,000 for tenant improvements on a leased restaurant space. The lender reviews the lease to confirm a 10-year term with two 5-year options, matching the 10-year loan term. They also obtain a landlord's waiver granting a lien on the improvements and access rights.
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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