{"ok":true,"canonical_url":"https://dealroom.so/glossary/borrowed-equity","api_url":"https://dealroom.so/api/public/glossary/borrowed-equity","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"borrowed-equity","term":"Borrowed Equity","group":"Your money in the deal","definition":"This refers to funds borrowed from another source (not the SBA loan) to meet the SBA's equity injection requirement. The SBA has strict rules on what qualifies as \"borrowed\" and how it impacts the deal.","what_it_means":"The SBA generally prohibits using borrowed funds for your equity injection unless those funds are on \"full standby\" and require no repayment for the life of the SBA loan. A home equity line of credit, for example, is typically not allowed unless it meets these strict standby requirements. Most buyers use unencumbered personal funds or a seller note on standby.","url":"https://dealroom.so/glossary/borrowed-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"capital-injection","term":"Capital Injection","url":"https://dealroom.so/glossary/capital-injection"},{"slug":"home-equity-line-of-credit","term":"Home equity line of credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"}],"related_questions":[{"question":"Can personal funds borrowed against assets not being acquired count as my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-personal-funds-borrowed-against-assets-not-being-acquired-count-as-my-equity-injection"},{"question":"Can personal funds borrowed from a credit union against personal assets count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-personal-funds-borrowed-from-a-credit-union-against-personal-assets-count-towards-my-e"},{"question":"What are the eligibility requirements for funds borrowed from a third party to count as equity injection?","url":"https://dealroom.so/sba-7a/questions/what-are-the-eligibility-requirements-for-funds-borrowed-from-a-third-party-to-count-as-eq"},{"question":"Can funds borrowed against my personal brokerage account be used for the SBA 7(a) equity injection?","url":"https://dealroom.so/sba-7a/questions/can-funds-borrowed-against-my-personal-brokerage-account-be-used-for-the-sba-7-a-equity-in"},{"question":"Can I use borrowed funds from a personal unsecured loan for my equity injection if I commit to repaying it later?","url":"https://dealroom.so/sba-7a/questions/can-i-use-borrowed-funds-from-a-personal-unsecured-loan-for-my-equity-injection-if-i-commi"},{"question":"Can funds borrowed against my personal assets, like a home equity line of credit, be used for my SBA 7(a) loan down payment?","url":"https://dealroom.so/sba-loans/basics/can-funds-borrowed-against-my-personal-assets-like-a-home-equity-line-of-credit-be-used-fo"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Borrowed Equity","url":"https://dealroom.so/glossary/borrowed-equity","source_type":"DealRoom Data"}}