{"ok":true,"canonical_url":"https://dealroom.so/glossary/round-tripping-of-funds","api_url":"https://dealroom.so/api/public/glossary/round-tripping-of-funds","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":"round-tripping-of-funds","term":"Round-Tripping of Funds","group":"Your money in the deal","definition":"Round-tripping of funds occurs when the seller or a related party secretly provides money to the buyer, which is then presented as the buyer's equity injection.","what_it_means":"The SBA strictly prohibits round-tripping because it disguises the true source of funds and circumvents equity injection requirements. Lenders will thoroughly vet the origin of your down payment to ensure it is genuinely from your own seasoned funds and not directly or indirectly from the seller. This is a deal-breaker if discovered.","url":"https://dealroom.so/glossary/round-tripping-of-funds","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":"undisclosed-borrowed-equity","term":"Undisclosed Borrowed Equity","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity"},{"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":"out-of-pocket","term":"Out of pocket","url":"https://dealroom.so/glossary/out-of-pocket"}],"related_questions":[{"question":"Can an SBA 7(a) loan finance the acquisition of a business that is seasonal but also has year-round expenses?","url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-finance-the-acquisition-of-a-business-that-is-seasonal-but-also-has-ye"},{"question":"Can I use an SBA 7(a) loan to acquire a business that is seasonal but also has year-round expenses?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-acquire-a-business-that-is-seasonal-but-also-has-year-round-e"},{"question":"Can I use funds from a personal line of credit as part of my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-funds-from-a-personal-line-of-credit-as-part-of-my-equity-injection"},{"question":"Can funds from an unsecured personal line of credit be considered part of my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-an-unsecured-personal-line-of-credit-be-considered-part-of-my-equity-inject"},{"question":"How does the SBA verify the source of my equity injection funds?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-source-of-my-equity-injection-funds"},{"question":"What documentation is required to prove the source of my equity injection funds?","url":"https://dealroom.so/sba-7a/questions/what-documentation-is-required-to-prove-the-source-of-my-equity-injection-funds"}]},"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 — Round-Tripping of Funds","url":"https://dealroom.so/glossary/round-tripping-of-funds","source_type":"DealRoom Data"}}