{"ok":true,"canonical_url":"https://dealroom.so/glossary/hidden-equity-injection","api_url":"https://dealroom.so/api/public/glossary/hidden-equity-injection","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":"hidden-equity-injection","term":"Hidden Equity Injection","group":"Your money in the deal","definition":"Funds that appear to be part of your required down payment but are actually financed by the seller or another third party without the lender's knowledge. This is strictly prohibited by the SBA.","what_it_means":"The SBA requires your equity injection to be from unencumbered, seasoned funds. If the seller secretly finances a portion of your down payment, it's considered a hidden equity injection and can lead to the SBA denying the loan guaranty. All sources of funds must be disclosed and approved by the lender and SBA.","url":"https://dealroom.so/glossary/hidden-equity-injection","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":"seasoned-funds","term":"Seasoned funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"disguised-debt","term":"Disguised debt","url":"https://dealroom.so/glossary/disguised-debt"},{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"}],"related_questions":[{"question":"Can funds from a home equity line of credit be used for my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-be-used-for-my-equity-injection"},{"question":"Can I use funds from a home equity line of credit for my 10% equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-funds-from-a-home-equity-line-of-credit-for-my-10-equity-injection"},{"question":"How is 'sweat equity' or future services treated for an SBA 7(a) loan equity injection?","url":"https://dealroom.so/sba-7a/questions/how-is-sweat-equity-or-future-services-treated-for-an-sba-7-a-loan-equity-injection"},{"question":"Can a business's retained earnings count as equity injection?","url":"https://dealroom.so/sba-loans/basics/can-a-business-s-retained-earnings-count-as-equity-injection"},{"question":"Is there a minimum cash portion for the equity injection?","url":"https://dealroom.so/sba-7a/questions/is-there-a-minimum-cash-portion-for-the-equity-injection"},{"question":"Are proceeds from personal investment sales eligible for equity injection?","url":"https://dealroom.so/sba-7a/questions/are-proceeds-from-personal-investment-sales-eligible-for-equity-injection"}]},"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 — Hidden Equity Injection","url":"https://dealroom.so/glossary/hidden-equity-injection","source_type":"DealRoom Data"}}