I concur with Francis. The SBA 7A program allows you to buy businesses that lease their space. The SBA prefers the remaining term available on the lease be 10 years, either directly or with buyer options to get it there. However, if the space is not essential to the business (like generic office space) we have had success doing deals where the remaining lease term is less. The landlord also needs to sign a landlord waiver that is the landlord agreeing to notify the lender for a default under the lease, giving the lender the right to cure the default, and providing access to the lender to get any collateral they have should a default occur. I would say 75% plus of the deals we do are for leased spaces.

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Not only is not an issue, but often I prefer that a borrower not acquire the real estate at the time they are acquiring the business. Focus on the due diligence in acquiring The Prize (the operating company) and closing on that. Lease the real estate at market rates with an option to buy that you can pull the trigger on at a later date (likely with 100% financing). Takes your overall initial leverage and equity requirements down significantly.