# Can I rent out part of a building bought with an SBA loan?

**Short answer:** Yes. In an existing building you may lease up to 49% if your business occupies at least 51%. Loan proceeds cannot improve the leased space. Source: 13 CFR § 120.131(b); SOP 50 10 8.1, Sec. A, Ch. 3, Para. C.

Canonical page: https://www.sbaexpress.loans/answers/lease-part-of-sba-financed-building/
Last checked: 2026-11-08

Yes, within limits. 13 CFR § 120.131(b) lets a borrower permanently lease up to 49% of the Rentable Property in an existing building. Your business must occupy and use at least 51%.

## What the rules restrict

- Proceeds cannot improve or renovate space to be leased to a third party (SOP 50 10 8.1, Section A, Ch. 3, Para. C).
- The limits apply whether the tenant is commercial or residential.
- During the loan, the property cannot be leased to a business you know engages in illegal activity under federal, state or local law.

## How rent affects underwriting

- On a Standard 7(a) loan, projected coverage may not include anticipated rental income from the project property. That income may appear in the global cash flow analysis (Section B, Ch. 1, Para. C.2).
- On a 504 loan, rental income may appear in global cash flow but not the repayment analysis (Section C, Ch. 1, Para. E.1).
- A 7(a) appraisal may not include the contributory value of rental income in valuing the collateral (Appendix 19, Para. A).

## Why the loan must support your own business

A business primarily engaged in owning or buying real estate and leasing it is ineligible (Section A, Ch. 1, Para. E). The rule lets you rent out spare space. It does not let you buy a rental property.

## Sources

- [13 CFR § 120.131(b)](https://www.ecfr.gov/current/title-13/section-120.131)
- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. C.1 (about p. 56)](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. B, Ch. 1, Para. C.2 (about pp. 119-120)](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. C, Ch. 1, Para. E.1 (about p. 248)](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, App. 19, Para. A, Commercial real estate appraisal requirements (about p. 406)](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 (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)