Glossary · The loan itself
Equipment Lease
In short
An equipment lease is a contract to rent equipment for a specified period, rather than buying it outright. Existing leases on essential equipment will impact the business's cash flow and your debt service capacity.
What it means in a deal
During due diligence, carefully review all existing equipment leases. Understand the monthly payments, remaining term, and whether the lease includes a purchase option. These fixed obligations reduce the cash flow available for your SBA loan payments. New equipment can sometimes be purchased with SBA loan funds, but leasing isn't typically covered.
Related terms
Common questions about Equipment Lease
- If the business property is leased, can the SBA loan finance a security deposit for the lease?
- If the business property is leased, can an SBA 7(a) loan finance security deposits for the lease?
- Can an SBA 7(a) loan finance tenant improvements on leased property if the lease term matches the loan term?
- If I am buying a business that leases its property, can I get a longer loan term if the lease is long-term?
- What collateral is required if the business being acquired primarily leases its equipment and vehicles?
- What specific due diligence is required if a 7(a) loan finances only equipment located in a leased property?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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