# Can an SBA loan pay for leasehold improvements?

**Short answer:** Yes. A 7(a) loan can fund improvements to leased space. The term can run 10 years, plus up to 12 months to complete the improvements (SOP 50 10 8.1, App. 17, Para. A.4). Proceeds cannot improve space you sublease (Sec. A, Ch. 3, Para. C.1.f).

Canonical page: https://www.sbaexpress.loans/answers/can-an-sba-loan-pay-for-leasehold-improvements/
Last checked: 2026-11-09

Yes. SBA's lender page refers to 7(a) loans that finance leasehold improvements when it sets maturity terms. The term can run 10 years, plus up to 12 months to complete the improvements (SOP 50 10 8.1, App. 17, Para. A.4).

## Your lease matters

Section A, Chapter 3, Paragraph C.3.a applies when $500,000 or 30% of the proceeds, whichever is less, goes to leasehold improvements. It also applies when that much of the collateral is leasehold improvements, or fixtures or equipment attached to leased real estate.

- The lender must get a copy of the written lease.
- On a 7(a) loan, the lease term, with renewal options only you can exercise, should equal or exceed the loan term.
- The lender should obtain an assignment of lease and a landlord's waiver.
- If it cannot get them, the lease term with your options must equal or exceed the loan term.

## Space you do not occupy

You may not use proceeds to improve space that will be subleased to a third party (Para. C.1.f).

## If the landlord pays you back

The landlord's reimbursement must pay down the loan to a point that will not trigger a subsidy recoupment fee. Any remainder can go to working capital or lower rent. If the lender documents that it factored the reimbursement into its working capital analysis, the money may go to working capital or rent (Para. C.3.c).

## Sources

- [sba.gov/sba-lenders, read November 8, 2026](https://www.sba.gov/sba-lenders)
- [SOP 50 10 8.1, App. 17, Para. A.4, Loan Maturity Requirements (p. 390)](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. C, Occupancy and Leasing Requirements, Paras. C.1.f and C.3 (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)