Hey all -
For those who've gone through SBA financing and had to work through a transfer of lease, how have your worked through the 10-yr lease requirement? From what I understand there are two options: 10-year lease, 5-year lease + 5 year option.
I'm wondering if there are options here. The company I am under contract with has two locations and two different landlords. Landlords are okay with 5-year lease, however, nearly a hard no on the 5-year option.
Any insight/guidance would be helpful.
Thanks!
SBA 7a Lease Requirement
by a searcher from Babson College - F.W. Olin Graduate School
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And if you build in some financial upside for your LL on the optional extensions (i.e. 6% increase per year or something on the high end of market) you can always use your option as leverage to renegotiate down the road if the RE market has drastically changed and you have other options - with the caveat that the Landlord doesn't HAVE to renegotiate.
However, depending on the type of business, there may be flexibility it not having a 10 year renewal. If the business is a restaurant or some sort of destination location with required build-out to operate, a 10-year lease is almost always going to be mandatory. However, if it is just generic office space with no specific build-out and the location can easily be replaced, then sometimes the lender will accept a lessor lease.
If you would like to discuss options directly, I would be more than happy to do so. You can reach me at --@----.com