Glossary · Reading the business
Prepaid Rent
In short
This is rent paid in advance for a future period. It's an asset on the balance sheet, representing a future expense already covered.
What it means in a deal
In an acquisition, prepaid rent can be a working capital adjustment. Ensure the seller transfers any benefit of prepaid rent to you at closing, often handled as a credit against the purchase price. Verify the lease agreement for details.
Related terms
Common questions about Prepaid Rent
- Can a prepaid rent amount for the acquired business count towards my equity injection?
- Are prepaid rent or insurance expenses paid before closing considered part of the equity injection?
- Can I use prepaid expenses, like insurance premiums, as part of my equity injection?
- Can I use an SBA 7(a) loan for inventory, payroll, or rent?
- Can an SBA 7(a) loan cover ongoing operational costs like rent or utilities?
- Can an SBA 7(a) loan be used for general business expenses like ongoing rent?
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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