Glossary · People and paperwork
Real estate entity(PropCo)
In short
This is a separate company, often owned by the seller, that holds the business's real estate. It's crucial to understand if you're buying just the business or also the property, or if you'll need a new lease.
What it means in a deal
Often, a seller's operating business leases its premises from a related real estate entity. If you're not buying the real estate, you'll need a new long-term lease with fair market rent. Ensure the real estate entity agrees to a Landlord Subordination Agreement, which is often required by SBA lenders.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Real estate entity
- What if the real estate for the business is owned by a separate entity controlled by the seller?
- What happens if the business real estate is held in a separate entity owned by the buyer, not the operating company?
- If the business real estate is in a separate entity, what documentation is needed to link it to the operating company?
- If the business real estate is held in a separate entity by the seller, can the SBA loan still finance it?
- If the business real estate is owned by a separate entity controlled by the seller, how is the lease handled for SBA purposes?
- What is the difference in repayment terms between real estate and non-real estate loans?
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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