{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-cash-out-refinance-of-my-personal-home-count-as-equity-injection-for-an-acquisition","api_url":"https://dealroom.so/api/public/questions/can-a-cash-out-refinance-of-my-personal-home-count-as-equity-injection-for-an-acquisition","question":"Can a cash-out refinance of my personal home count as equity injection for an acquisition?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"No, generally, funds from a cash-out refinance of a personal home are considered debt and cannot be used for the required equity injection.","rule":"The SBA requires equity injection funds to be unencumbered. A cash-out refinance creates new debt that must be repaid, which the SBA considers an impermissible source for equity injection, as it would indirectly burden the borrower's ability to repay the business loan.","example":"If you need a $100,000 equity injection for a $1,000,000 business and consider refinancing your home to pull out $100,000, the lender would disallow these funds. You would need to use existing savings or other unencumbered sources.","what_lenders_check":"Lenders diligently verify the source of the equity injection to ensure it is not borrowed money that would create additional debt service for the borrower, thereby undermining the business's projected cash flow.","required_facts":["Cash-out refinance","Personal home","Debt funds","Equity injection","Unencumbered funds"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"Can I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-7a/questions/can-i-use-retirement-funds-from-a-401-k-as-equity-injection-for-a-750-000-business-purchas"},{"question":"Can funds from a home equity line of credit (HELOC) be used as my equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-heloc-be-used-as-my-equity-injection-for-a-bus"},{"question":"Is it possible to use a second mortgage on my personal residence as an equity injection for a $1.5 million business acquisition?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-to-use-a-second-mortgage-on-my-personal-residence-as-an-equity-injection-fo"},{"question":"How much cash must I personally inject for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-much-cash-must-i-personally-inject-for-an-sba-7-a-business-acquisition"},{"question":"What are the acceptable sources for my cash equity injection beyond personal savings?","url":"https://dealroom.so/sba-7a/questions/what-are-the-acceptable-sources-for-my-cash-equity-injection-beyond-personal-savings"},{"question":"What is the SBA's minimum required equity injection percentage for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"Cash-out refinance","url":"https://dealroom.so/glossary/cash-out-refinance"},{"term":"Cash-out","url":"https://dealroom.so/glossary/cash-out"},{"term":"Home equity","url":"https://dealroom.so/glossary/home-equity"},{"term":"Non-Cash Equity Injection","url":"https://dealroom.so/glossary/non-cash-equity-injection"},{"term":"Cash injection","url":"https://dealroom.so/glossary/cash-injection"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-cash-out-refinance-of-my-personal-home-count-as-equity-injection-for-an-acquisition","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}