Compare · sale-leaseback vs SBA
Sale-leaseback vs SBA loan
SBA 7(a) and 504 are loan products with eligibility, fees, and covenants. A sale-leaseback is a sale plus a lease. Both can fund expansion. They are not substitutes.
Written by Dwaine Clarke , Founder & Principal Broker, American Net Lease, LLC Reviewed
On this page: The honest answer · Side by side · When each wins · Together · FAQ
The honest answer
One paragraph, then the table
Reach for SBA when you qualify, you want to keep the deed, and you can live with a personal guarantee, fees, and covenants on a government-backed note. Reach for a sale-leaseback when eligibility is the constraint, you need proceeds above a typical advance, or you do not want another guarantee stacked on the real estate.
Operators most often weigh this in Restaurants & QSR franchisees , and Childcare . It pairs most often with expansion capital without new debt and remodel and reimage capital . Run the sale-leaseback calculator for a first pass, then request a Portfolio Capital Analysis.
Side by side
Eligibility and covenants are the rows most pages skip
| Topic | Sale-leaseback | SBA loan |
|---|---|---|
| Proceeds | Up to 100% of value | Typically 60–75% LTV, subject to SBA and lender limits |
| Balance sheet | No new debt on the real estate | New government-backed debt |
| Personal guarantee | None on the real estate | Owner guarantees are the norm |
| Control of the site | Lease you author | Ownership, subject to lender and SBA rules |
| Cost of capital | Priced as a cap rate on rent you can support | Priced as rate, points, and SBA fees on a note |
| Timeline | Analysis in 48 hours; close follows lease, title, and the buyer | Eligibility, appraisal, and the lender's SBA process |
| Upside in the dirt | Given up | Kept |
| Eligibility | Performing occupancy and a lease a buyer will purchase | Size, use, occupancy, and SBA eligibility screens |
| Fees | Transaction costs on a sale — not an SBA guarantee fee | Packaging, lender, and SBA guarantee fees on top of interest |
| Covenants | The lease you wrote; no loan covenants on the deed | Lender and SBA covenants on the operating company |
When Sale-leaseback wins
When the sale-leaseback is the cleaner expansion tool
You need equity from stores you already own, not another advance against the next unit. Development clocks and brand remodels do not wait on an eligibility screen.
You cannot or will not post another personal guarantee, or the use and occupancy do not clear SBA the way a lender needs them to.
When SBA loan wins
When an SBA loan is the cleaner expansion tool
You qualify, you want the residual, and the advance covers the next unit without starving coverage on the open stores. Keeping the deed is worth the guarantee and the covenant package.
American Net Lease does not package SBA 7(a) or 504. This page explains the alternative; it does not offer it.
Both together
SBA on the next box, sale-leaseback on the open ones
Some franchisees sell a first tranche of owned stores and use a conventional or SBA facility on the unit they are building. That only works if the sold stores still cover rent and the new facility is not counting on those deeds as collateral.
The sale-leaseback calculator is a first pass on the owned book. The Portfolio Capital Analysis is where SBA-versus-sale gets written against the development schedule.
Questions
Sale-leaseback vs SBA FAQ
Does a sale-leaseback replace SBA 504 for owner-occupied real estate?
It replaces the need for that advance when you are willing to sell the fee. It does not replace SBA as a product. 504 keeps you as owner-occupant with a loan. A sale-leaseback makes you the tenant.
Are SBA fees lower than a sale-leaseback's occupancy cost?
They are different costs. SBA adds fees and interest on a note you still owe. A sale-leaseback adds rent on a lease you wrote. Do not compare a guarantee fee to a cap rate and call one cheaper.
Can I have SBA debt on some stores and sell others?
Sometimes, if the existing SBA documents allow a release and the remaining collateral still satisfies the lender. That is a document question on the loan you already have — not a slogan on this page.
How do I start?
Request a confidential Portfolio Capital Analysis. Store count, current debt, and last year's unit-level earnings are enough to start. Call (239) 236-2626.
Get a confidential read on sale versus SBA, per store.
Store count, current debt, and last year's unit-level earnings are enough to start.