Regardless of the type of property the business operates out of, the SBA typically likes the term on the lease (or term with options) to match as closely as possible with the loan term. Even if the lease is shorter than the SBA loan term, most lenders will still provide the standard 10 year loan term. The SBA and lenders worry about the cost and disruption to a business if it has to move. If there is no way to extend a lease but we can show it is easy to move the business (plenty of available space), that the current space is not essential to the business for one reason or another, and that there would not be a large moving costs or build-out cost or there are plans and a budget to cover that cost, then we can get loans done with a shorter lease term.

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It really depends on the type of business and how strong the business/guarantors are. To start, we won't ever do an SBA loan less than 10 years. If geographical location is important to the business for going concern reasons (i.e. daycare being close to its kids/parents), lenders will require a lease to match the term of the note (or with option to extend) no matter what.

If the business is a landscaping company, for example, and the lease is only for M&E storage, a lender will be more willing to waive this requirement. The SBA requires that if the deal includes leasehold improvements in the proceeds, the Borrower is required to obtain a lease with options for up to 10 years. If the deal does not include substantial leasehold improvements, it is up to a lender's discretion.