# SBA loans for real estate: questions and answers

**Short answer:** This page lists 17 answers on SBA loans for real estate. Each gives the rule first and names the SBA source it rests on.

Canonical page: https://www.sbaexpress.loans/answers/real-estate/
Last checked: 2026-11-09

These answers cover buying, building and improving property with an SBA loan, including occupancy, appraisals and environmental review.

## All 17 answers on SBA loans for real estate

Each entry gives the short answer. Open it for the full explanation and its sources.

### [What are the SBA occupancy rules for new construction?](https://www.sbaexpress.loans/answers/sba-new-construction-occupancy-60-percent/)

You must occupy at least 60% of the Rentable Property. Up to 20% may be leased permanently. The last 20% may be leased temporarily if you plan to use some within 3 years and all within 10. Source: 13 CFR § 120.131(a).

### [Can I rent out part of a building bought with an SBA loan?](https://www.sbaexpress.loans/answers/lease-part-of-sba-financed-building/)

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.

### [Can an SBA loan buy a mixed-use building with apartments?](https://www.sbaexpress.loans/answers/sba-loan-mixed-use-building-apartments/)

Yes, if your business meets the occupancy test. Space zoned residential can be rented out within the limits. But SBA says apartment buildings and mobile home parks are not eligible. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E and Ch. 3, Para. C.

### [What property restrictions can block an SBA real estate loan?](https://www.sbaexpress.loans/answers/property-restrictions-that-block-sba-loan/)

A commercial property assessed clean energy (C-PACE) loan on the property is barred, and environmental indemnification provisions that run with the land must be removed or waived. Lenders must also weigh deed restrictions and engineering controls. Source: SOP 50 10 8.1, Sec. A, Ch. 3, Para. B; App. 19, Para. A.

### [What must the lease between an EPC and OC say?](https://www.sbaexpress.loans/answers/epc-oc-lease-rent-requirements-sba/)

It must be written, subordinate to SBA's lien and at least as long as the loan, counting options only the Operating Company (OC) can exercise. Rent cannot exceed the loan payment plus the Eligible Passive Company (EPC)'s direct holding costs. Source: 13 CFR § 120.111(a); SOP 50 10 8.1, Sec. A, Ch. 2, Para. A.1.

### [Can SBA fund a partner buyout inside an EPC?](https://www.sbaexpress.loans/answers/buy-out-partner-epc-real-estate-sba/)

Yes, between existing EPC owners, if the selling owner has held the property at least 36 months. A 7(a) loan cannot fund a partial change of ownership in the EPC. A 504 must leave the buyer owning 100%. Source: SOP 50 10 8.1, App. 15, Para. A.4.a.

### [Can an SBA loan buy land to build on later?](https://www.sbaexpress.loans/answers/sba-loan-buy-land/)

Only as part of an eligible project you will use now. SOP 50 10 8.1 bars proceeds for land held for future development and for excess land not for immediate use in the project. Source: Sec. A, Ch. 3, Paras. A and B; 13 CFR § 120.130(d).

### [Does SBA construction require a payment and performance bond?](https://www.sbaexpress.loans/answers/sba-construction-payment-performance-bond/)

On a 7(a) loan, construction above $350,000 needs a 100% bond unless a construction manager provides funds control. At $350,000 or less, SBA waives it if the lender uses its usual construction policies. Source: 13 CFR § 120.200.

### [Can I act as my own general contractor on an SBA loan?](https://www.sbaexpress.loans/answers/be-own-general-contractor-sba-loan/)

Possibly. SBA calls do-it-yourself construction generally unsatisfactory. It is allowed if the lender documents you are experienced and licensed, the cost matches or beats outside bids, and you earn no profit. Source: SOP 50 10 8.1, Sec. B, Ch. 6, Para. A.4.

### [Who pays cost overruns on an SBA construction loan?](https://www.sbaexpress.loans/answers/sba-construction-cost-overruns/)

You do. On 7(a) construction above $350,000, the lender must see evidence you can pay overruns before approving a contract change. Neither the lender nor SBA must increase the loan. Source: SOP 50 10 8.1, Sec. B, Ch. 6, Para. A.4.

### [Can SBA finance improvements on a ground lease?](https://www.sbaexpress.loans/answers/sba-loan-ground-lease-improvements/)

Yes, with conditions. The ground lease must let you encumber the leasehold and protect the lender at foreclosure. A 504 needs an unrelated lessor and a lease at least as long as the debenture. Source: SOP 50 10 8.1, Sec. A, Ch. 3, Para. C; 13 CFR § 120.870(a).

### [What are SBA's rules for a commercial real estate appraisal?](https://www.sbaexpress.loans/answers/sba-commercial-real-estate-appraisal-requirements/)

A 7(a) appraiser must be independent and state-licensed or certified, follow Uniform Standards of Professional Appraisal Practice (USPAP) and date the report within 12 months of the guaranty application. Above $1,000,000, the appraiser must be state-certified. Source: SOP 50 10 8.1, App. 19, Para. A.

### [What happens if an SBA appraisal comes in low?](https://www.sbaexpress.loans/answers/sba-appraisal-comes-in-low/)

On a 7(a) loan, an appraisal at 90% or more of the estimate lets the lender close with a written explanation. Below 90%, the lender needs SBA's permission, unless it holds Preferred Lender Program (PLP) authority and documents its justification. Source: SOP 50 10 8.1, App. 19, Para. A.

### [What environmental review does an SBA real estate loan require?](https://www.sbaexpress.loans/answers/sba-environmental-review-requirements/)

SBA requires an environmental investigation of all commercial property taken as security. A sensitive current or prior use means a Phase I. Otherwise it starts with a questionnaire, plus a records search above $250,000. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. E.

### [What SBA rules apply to gas station and dry cleaner properties?](https://www.sbaexpress.loans/answers/sba-gas-station-dry-cleaner-environmental-rules/)

Any property with on-site dry cleaning needs a Phase I followed by a Phase II. A gas station loan must begin with a Phase I by an independent professional and confirm tank testing compliance. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. E; App. 7.

### [Can SBA finance a property with environmental contamination?](https://www.sbaexpress.loans/answers/sba-loan-contaminated-property/)

Sometimes. A loan cannot be approved or disbursed with known contamination or ongoing remediation unless the risks are minimized to SBA's satisfaction. The SOP lists mitigating factors such as indemnification, closure letters and escrow. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. E.5.

### [How does SBA treat buying a hotel or self-storage business?](https://www.sbaexpress.loans/answers/hotel-storage-special-purpose-acquisition-sba/)

As a Special Purpose Property deal if the real estate is integral. A single 7(a) loan can run up to 25 years if real estate is 85% or more of project cost. No Quality of Earnings report is required. Source: SOP 50 10 8.1, App. 15, Para. B.1.