# Can an SBA loan buy rental or investment property?

**Short answer:** No. Property held primarily for sale, lease or investment is a prohibited use under 13 CFR 120.130(d). You can buy a building you occupy and rent out up to 49% of an existing building (SOP 50 10 8.1, Sec. A, Ch. 3, Paras. B.5 and C.1).

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Last checked: 2026-11-08

No. SOP 50 10 8.1 bars investments in real or personal property held primarily for future development, sale, lease or investment (Sec. A, Ch. 3, Para. B.5). The regulation is 13 CFR 120.130(d).

## Land for later

Excess land is barred too, meaning land not for immediate use as part of the project (Para. B.5). A farm cannot buy land beyond its operation's needs, or vacant or row crop land for possible future use (Para. A.3).

## Owner-occupied property is different

SBA finances property the business actually uses. Under 13 CFR 120.131 and Paragraph C.1:

- For an existing building, you must occupy at least 51% of the Rentable Property and may lease up to 49%.
- For new construction, you must occupy at least 60%. You may permanently lease up to 20% and temporarily lease another 20%. You must plan to use some of that space within 3 years and all of it within 10 years.

## Two exceptions

An Eligible Passive Company can hold real estate and lease it to an operating company, if it meets 13 CFR 120.111. A small contractor can use a Builders CAPLine to build or rehabilitate property for resale (Sec. B, Ch. 4, Para. A.4).

A business primarily engaged in owning or purchasing real estate and leasing it is ineligible altogether (Sec. A, Ch. 1, Para. E).

## Sources

- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. B, Restrictions on Uses of Proceeds, Para. B.5 (p. 53)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. A, Eligible Uses of Proceeds, Para. A.3 (p. 51)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.130](https://www.ecfr.gov/current/title-13/section-120.130)
- [13 CFR § 120.131](https://www.ecfr.gov/current/title-13/section-120.131)
- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. C, Occupancy and Leasing Requirements, Para. C.1 (p. 54)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.111](https://www.ecfr.gov/current/title-13/section-120.111)
- [SOP 50 10 8.1, Sec. B, Ch. 4, Para. A.4, Builders CAPLines (Para. A begins p. 144)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. A, Ch. 1, Para. E, Passive Businesses (Para. E begins p. 18)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)