SBA 7(a) Q&A
Short answer
The SBA requires that any real estate owned by a seller's affiliate be included in the sale to the buyer if it is essential to the business operations, or a fair market lease must be established.
When the seller's operating business leases its primary facility from an affiliate (e.g., a separate entity owned by the seller), the SBA generally requires that the real estate also be sold to the buyer, or that a long-term, arm's-length lease at fair market value be established. This prevents the seller from retaining control over a critical asset and potentially jeopardizing the buyer's business. The loan can finance the acquisition of both the business and the real estate.
A buyer is purchasing a manufacturing business, but the building is owned by an LLC solely controlled by the seller. The SBA lender will require the buyer to either purchase the real estate from the seller's LLC as part of the acquisition or secure a long-term, commercially reasonable lease with that LLC.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule
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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