{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-loan-secured-by-non-business-personal-assets-from-a-third-party-count-as-equity-inje","api_url":"https://dealroom.so/api/public/questions/can-a-loan-secured-by-non-business-personal-assets-from-a-third-party-count-as-equity-inje","question":"Can a loan secured by non-business personal assets from a third party count as equity injection?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"It depends. A loan secured by personal assets from a third party, if fully subordinated to the SBA loan, could potentially count as equity. However, the SBA prefers unencumbered cash.","rule":"Funds borrowed from a third party, even if secured by personal assets, generally do not count as equity if repayment is expected. For it to count, the loan would need to be on 'full standby' to the SBA loan, meaning no payments (principal or interest) could be made until the SBA loan is repaid in full. This effectively makes it 'equity-like' from the SBA's perspective.","example":"A buyer takes a $75,000 loan from a family member, secured by a lien on their vacation home, specifically for the business acquisition. For this to count as equity, the family member's loan must be on full standby to the SBA 7(a) loan, meaning no payments can be made on the $75,000 until the SBA loan is repaid.","what_lenders_check":"Lenders are wary of any funds that add additional debt burden, even if secured by personal assets. They meticulously review the standby agreement and the source of the funds, ensuring there are no other undisclosed liens or repayment obligations that could jeopardize the business's cash flow or the SBA's lien position.","required_facts":[],"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":"Third-party loan","url":"https://dealroom.so/glossary/third-party-loan"},{"term":"Third-Party Equity Investments","url":"https://dealroom.so/glossary/third-party-equity-investments"},{"term":"Third-party agent","url":"https://dealroom.so/glossary/third-party-agent"},{"term":"Third-Party Report","url":"https://dealroom.so/glossary/third-party-report"},{"term":"Third-party appraisal","url":"https://dealroom.so/glossary/third-party-appraisal"},{"term":"Third-party debt","url":"https://dealroom.so/glossary/third-party-debt"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-loan-secured-by-non-business-personal-assets-from-a-third-party-count-as-equity-inje","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."]}