Glossary · Reading the business
In short
A lease agreement where the business leases property from its owner or an affiliated entity. These leases require scrutiny because terms might not be "arm's length," potentially inflating expenses or masking true profitability.
During due diligence, carefully evaluate any related-party leases for commercial real estate or equipment. Lenders will want to ensure the lease terms are at fair market value. If the lease payments are excessive, the lender might "normalize" them to market rates when calculating cash flow, affecting the business valuation and your ability to qualify for the loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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