{"ok":true,"canonical_url":"https://dealroom.so/glossary/undisclosed-borrowed-equity","api_url":"https://dealroom.so/api/public/glossary/undisclosed-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":"undisclosed-borrowed-equity","term":"Undisclosed Borrowed Equity","group":"Your money in the deal","definition":"Undisclosed borrowed equity refers to funds presented as a buyer's cash equity injection that were secretly borrowed, often from the seller or a related entity.","what_it_means":"The SBA requires your equity injection to be unencumbered by debt. If you secretly borrow funds for your down payment, especially from the seller, it's considered undisclosed borrowed equity and will lead to loan denial. All sources of your equity must be fully transparent and meet SBA requirements.","url":"https://dealroom.so/glossary/undisclosed-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":"round-tripping-of-funds","term":"Round-Tripping of Funds","url":"https://dealroom.so/glossary/round-tripping-of-funds"},{"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 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 — Undisclosed Borrowed Equity","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity","source_type":"DealRoom Data"}}