Glossary · People and paperwork
Pre-paid lease
In short
A lease payment made in advance for future occupancy or use of an asset. For a buyer, this means the seller has already covered some of your future occupancy costs, which is a benefit.
What it means in a deal
In a 7(a) acquisition, a pre-paid lease often gets factored into working capital adjustments or as an asset on the balance sheet. Verify the period covered and ensure it's transferable to you as the new owner. It reduces your immediate cash outflow post-closing.
Related terms
Common questions about Pre-paid lease
- Can a buyer contribute a pre-paid lease agreement for the business premises as part of their equity injection?
- Can a substantial pre-paid rent deposit on a commercial lease count towards the equity injection for a business acquisition?
- 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?
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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